Dow shakeup: Citi, GM out, Travelers and Cisco in
GM's bankruptcy Monday explains its departure. Citi is leaving because "the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake," said Dow Jones editor-in-chief Robert Thomson in The Wall Street Journal. "We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion -- Citigroup is a renowned institution, not only in this country, but around the world."
Few companies have been hit has as hard by the financial crisis as Citi. Its shares have plunged more than 93 percent over the past two years, and it traded near $1 a share during the markets' dive in early March.
There's a touch of irony to the moves for long-time watchers of Citigroup. It was Citi's 1998 merger with Travelers that created a "financial supermarket" that was supposed to provide customers with easy access to banking, insurance and brokerage services all in one convenient stop. But the marriage proved unworkable and Travelers was spun off in 2002.
Citi's and GM's departure from the DJIA had been anticipated for months, and while market watchers sometimes tabbed Cisco as a potential replacement, Travelers wasn't on nearly as many people's short list of potential candidates.
Both Cisco and Travelers have outperformed the S&P 500 and the DJIA over the past year. Travelers fell 18.4 percent and Cisco dropped 30.8 percent over that span, compared with a 32.7 percent decline for the Dow and a 34.4 percent drop for the broader S&P 500.
Update: Not only is General Motors getting the boot from the Dow, it will also be replaced in the S&P 500. Education company Devry will take GM's place after the market closes Tuesday.