Citigroup joined the Dow in 1997, as Citicorp. Ironically, Travelers merged with Citicorp to form Citigroup in 1998, creating what was then termed a "financial supermarket." Citigroup spun off Travelers in 2002. At the time of the 1998 merger, Travelers was a member of the Dow 30.
Dow Jones decided to add another financial company to the index in order to re-calibrate the index. When the Dow let go of American International Group in September, it replaced the insurance company with Kraft Foods (KFT, Fortune 500) because the financial sector was in so much turmoil.
"The selection of Travelers, a property and casualty insurance company, is intended to restore the financials industry to full representation in The Dow," said Thomson.
Dow Jones said the changes won't cause any disruption in the level of the index. A divisor is used to calculate The Dow from its components' prices, which prevents any distortion in the Dow. |