Dow Industrials drops GM along with Citigroup

Dow Jones and Company reported Monday that it would be adding two additional corporations to its industrial average. The two companies are Travelers and Cisco Systems. Needless to say, when two go in the average, two need to exit.

Given the reports that has happened with GM over the earlier few months, it is a no brainier that GM would be removed from the average. On the other hand, Citigroup was in addition given the boot.

Travelers was once a subsidiary of Citigroup and will help preserve the representation of financial corporations in the average.

Citigroup has had a rather bumpy year with subprime lending, the credit disaster, and eventually the downturn taking huge cuts from Citigroup. Citigroup is the second financial business to be dropped from the average during this recession, the first being AIG. AIG was taken off the average in September after the government took an 80% investment in the business and lent it several billion dollars in bailout money.

The Dow industrial average includes 30 stocks. These stocks are a gauge of the market and what the public typically looks at to compute the health of the markets as well as the economy. It is currently made up of (on top of Travelers and Cisco) 3M (MMM), Alcoa (AA), American Express (AXP), At&t (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Chevron Corporation (CVX), Coca-Cola (KO), DuPont (DD), ExxonMobil (XOM), General Electric (GE), Hewlett-Packard (HPO), The Home Depot (HD), Intel (INTC), IBM (IBM), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Kraft foods (KFT), McDonalds (MCD), Merk (MRK), Microsoft (MSFT), Pfizer (PFE), Procter & Gamble (PG), United Technologies Corporation (UTX), Verizon Communications (VZ), Wal-Mart (WMT), and Walt Disney (DIS).

The changes will start next Monday.

Citi has been on the Dow industrial average for 12 years, when it was listed as Citicorp. It became Citigroup in 1998 when Travelers Group combined with Citicorp. In 2002, Travelers was spun off once more and has been a unattached corporation ever since. So, it is a bit strange that the parent business has fallen off the average and has been out performed by its subsidiary.

In truth, Travelers is taking AIG’s formerly held location in the average. The center product of both corporations is the similar; casualty insurance sales.

GM has to get its actions composed to even be considered before it is put back on the average yet again. It will probably be years for the once robust auto business to see the tops of any list. Of course, I do think that bankruptcy was a move in the correct direction. If it were left up to its own devices, GM would have been filing for bankruptcy a year ago, if the state wouldn’t have come in. Worse, if they didn’t file for bankruptcy and couldn’t reorganize, the government would have lost all of our money in the GM “venture” and would be heaving money into a limitless pit.

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