This Key State Dominates the Dow

The 30 stocks in the Dow Jones Industrials are meant to be a broad-based cross-section of the entire U.S. economy. With 13 different states represented among the Dow's components, the selection committee has done a good job of making sure that the list is diverse.

But one state nevertheless stands out as a crucial center of business activity for the Dow. Fully seven different Dow components have their headquarters within this state, and despite faster population growth in other parts of the country, it will likely remain a powerhouse for the nation's top companies for a long time to come. That state is New York, but you might be surprised at some of the companies that call the Empire State home.

Source: Elisa Rolle via Wikimedia Commons.

The financial center of the world
It's no surprise that many of the Dow's financial stocks call New York home. American Express, JPMorgan Chase, and Travelers all have their headquarters in New York City, which retains its status as the financial capital of the world.

Yet the Dow acknowledged the changing landscape of the financial industry when it brought in Charlotte-based Bank of America to the Dow fold. During the financial crisis, references to "Wall Street banks" were common, yet you'll find several systemically important banks beyond the five boroughs. Still, even with major banks spread from North Carolina and Minnesota to California, New York maintains a strong presence within the financial industry.

Surprise city-dwellers
Even beyond finance, several Dow stocks have centered on New York City. Verizon owes its headquarters to its historical status as the successor to two regional Bell operating companies, as it was formed from the combination of Bell Atlantic and NYNEX with independent phone company GTE.

Pfizer has been a staple of the New York City business world for over a century and a half. It was founded in Brooklyn in 1849, and although it has its major research facility in Groton, Connecticut, Pfizer still keeps its corporate headquarters within the New York City limits -- albeit across the East River in midtown Manhattan.

Alcoa arguably has the weakest connection to New York. The aluminum company was founded in Pittsburgh and maintains its operational headquarters there. But for purposes of coordinating its international operations, which span across more than 30 different countries, Alcoa has made the logical choice of New York City as its official headquarters location.

Heading upstate
Finally, a discussion of New York's influence on the Dow wouldn't be complete without mentioning IBM's Armonk headquarters. The tech giant's birthplace was actually in Endicott, New York, which is considerably further away from New York City near Binghamton. After World War 2, IBM moved its headquarters to the Westchester County town that currently is it corporate home. IBM also has its Watson Research Center within the state in Yorktown Heights, about 40 miles north of New York City.

Where to find the Dow's strength
Demographic trends have greatly diminished the importance of the Northeast from what it once held. Yet even as populations have moved westward and southward, the Dow still reflects New York's key role in the business world.

New York might be important for the Dow, but among the selections you'll find in the Motley Fool's special report, "The 3 Dow Stocks Dividend Investors Need," you won't find a single New York-based company. Find out where these great investments call home by reading this free report; simply click here now and get your copy today.

The article This Key State Dominates the Dow originally appeared on Fool.com.

Fool contributor Dan Caplinger owns warrants on Bank of America and JPMorgan Chase. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends American Express and Bank of America and owns shares of Bank of America, IBM, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.