BAC – Bank of America Corp. and CVX – Chevron Corp. will replace tobacco company MO – Altria Group, Inc. and manufacturer HON – Honeywell International, Inc. in the Dow Jones industrial average, giving the stock market’s best-known indicator bigger slices of the banking and energy sectors.
BAC – Bank of America, based in Charlotte, N.C., is the nation’s biggest bank by deposits.
CVX – Chevron Corp., the energy company based in San Ramon, Calif., joins rival XOM – Exxon Mobil Corp. as a Dow component. Chevron has been part of the Dow twice before. The company, then known as Standard Oil Co. of California, had a brief stint in the mid-1920s before what would become Chevron had a long run as a Dow stock from 1930 until 1999.
The changes, which occur Feb. 19, are the first since April 2004 when the index added insurer AIG – American International Group, Inc., drug maker PFE – Pfizer, Inc. and telecommunications company VZ – Verizon Communications, Inc. in place of what was then AT&T Corp., Eastman Kodak Co. and International Paper Co. The AT&T name has since resurfaced in the Dow through phone-company mergers.
Still, the only one Dow component that has been around since the index began with a dozen names in 1896 is GE – General Electric Company.
Dow Jones plans to tweak the formula it uses to calculate the Dow so that the substitutions won’t change the value of the index, which is based on the stock prices of its components. With the DJIA, as the stock market’s most well-known index, many investors equate the moves of the Dow as a barometer of the overall stock market. However, many professional investors also look to the Standard & Poor’s 500 index for a snapshot of conditions on Wall Street.