Effective as the markets open on April 8, American International Group Inc, Pfizer Inc, and Verizon Communications Inc will replace AT&T Corp, Eastman Kodak Co and International Paper Co in the Dow Jones Industrial Average, effective with the opening of trading on April 8, Dow Jones & Co said in a news release.
These changes are the first in the 107-year-old stock index since November 1, 1999, when four stocks out of 30 were replaced. The major difference though is that previous rebalancings were made as part of an imminent merger, Paul Steiger , managing editor of The Wall Street Journal said in the news release. By tradition, the Journal’s top news editor oversees the composition of the Dow industrials.
“Rather, they recognize trends within the U.S. stock market, including the continued growth of the financial and health care sectors and the diminishing relative weight of basic materials stocks,” Steiger said.
The changes will not cause any disruption in the level of the index. The divisor used to calculate the average from its components’ prices on their respective home markets will be changed prior to the opening on April 8, preventing any distortion in the reflection of theU.S. stock market, Dow Jones said.