Tweaks for Dow Industrials

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Dow Jones Industrials Average (DJIA, Wikipedia), commonly referred as Dow Industrial Index, is widely perceived as the benchmark of the US stock market. This perception is not necessary a reflection of reality, as I said in my earlier post.

Today Dow underwent another tweak: from Feb 19 it will remove Altria (MO, today’s closing price $72.42) and Honeywell (HON, $57.64), at the same time it will add Bank of America (BAC, $42.14) and Chevron (CVX, $80.42). Since Dow is a purely price weighted, so the relative strength of Oil company as of late should help it, while the weakness of financials (BoA) will do the opposite.

Interestingly, if we add the closing price of two outgoing stocks ($120.06), vs. the new comers ($122.56), they are very close. An co-incident, or another factor considered by the creator of Dow 🙂