Bank of America dropped in Dow Jones shake-up

Bank of America, Hewlett-Packard and aluminum producer Alcoa have all been cut from the Dow Jones Industrial Average in the index’s most wide-reaching changes since 2004.

From September 23 the firms will be replaced by banking giant Goldman Sachs, Nike and Visa. The S&P Dow Jones Indices Committee – a five-person group that oversees the Dow, among other indices – says it wants to remove stocks with such diminished value that they no longer contribute meaningfully to the index.

David Blitzer, committee chairman and managing director of S&P Dow Jones, says the shake-up ‘will make the Dow a better index and a better measure of what is going on in the stock markets.’

He adds: ‘Low-priced stocks have little impact. These three companies together had a weighting of 3 percent in the Dow so their impact was quite small. We had a few stocks at the top that carried a huge weight so we tried to redress that.’

The changes are not set to have a large effect on the portfolios of many institutional investors, however, as most preferentially follow the S&P 500, which is said to provide a broader representation of the market. The Dow’s members are often referred to as blue chip stocks, or as options with ‘an excellent reputation, [that] demonstrate sustained growth and [are] of interest to a large number of investors’.

The news comes as a blow to Bank of America, HP and Alcoa, however, particularly as none of the institutions was warned about the decision before it was made public. Each has seen a significant downturn in its stock value since the announcement: HP, the most valuable of the three former Dow constituents, opened at $22.07 per share on Tuesday, worth less than a third of Nike’s opening price.

‘There is no intention to pick winners, by any means,’ adds Blitzer. ‘Adding a stock or dropping a stock is not a recommendation by any means.’

Upcoming events

  • Briefing – Lessons from the 2025 Proxy Season
    Tuesday, July 22, 2025

    Briefing – Lessons from the 2025 Proxy Season

    In partnership with WHEN 8.00 am PT / 11.00 am ET / 4.00 pm BST / 5.00 pm CET DURATION 45 minutes About the event The 2025 proxy season was influenced by several key issues, including changes announced in Staff Legal Bulletin 14M regarding the interpretation of Rule 14a-8, and…

    Online
  • Briefing – Effective earnings preparation amid macro volatility
    Thursday, August 07, 2025

    Briefing – Effective earnings preparation amid macro volatility

    In partnership with WHEN 8.00 am PT / 11.00 am ET / 4.00 pm BST / 5.00 pm CET DURATION 45 minutes About the event Amid constant tariff news, geopolitical upheaval and other developments stemming from the new US administration, IR teams have their work cut out as they prepare…

    Online
  • IR Impact Forum – AI & Technology
    Wednesday, November 12, 2025

    IR Impact Forum – AI & Technology

    About the event As more investors and corporate communication teams embrace AI, machine learning and emerging technologies to inform their decision-making, investor relations professionals are facing a pivotal moment: adapt and lead, or risk falling behind. At this early but fast-moving stage of adoption, IR teams are asking important questions…

    New York, US

Explore

Andy White, Freelance WordPress Developer London