October 26, 1999 11:20 AM PDT
Microsoft, Intel added to Dow index
The change underscores the level to which technology has affected the economy in the United States in the last few years. Although other technology issues already are represented on the Dow--namely, IBM and Hewlett-Packard--they are listed on the New York Stock Exchange, not the technology-heavy Nasdaq exchange.
Four of the 30 stocks changed today; along with Microsoft and Intel, Home Depot and SBC Communications were brought on to replace Chevron, Goodyear Tire & Rubber, Sears Roebuck, and Union Carbide, according to the editors of the Wall Street Journal, who choose the stocks. The Journal is published by Dow Jones. The changes will become effective when trading begins Monday.
The Dow Jones Industrial Average, which was created in 1896, is considered the barometer of the U.S. economy, and the companies chosen for it "are all major factors in their industries, and their stocks are widely held by individuals and institutional investors," according to Dow Jones. "These 30 stocks represent about a fifth of the $8 trillion-plus market value of all U.S. stocks and about a fourth of the value of stocks listed on the New York Stock Exchange."
The last changes to the Dow took place in March 1997. Chevron and Goodyear had been on the Dow since 1930, Sears had been on it since 1924, and Union Carbide since 1928, according to Dow Jones.
The changes to the Dow reflect a shift in the influence various sectors have on the economy. With Chevron off the list, Exxon becomes the only energy stock on the blue-chip index, for example. The addition of Microsoft and Intel--two of the most influential companies in the technology sector--as well as SBC Communications signals a recognition of the importance of computers and the Internet.
"The changes we are announcing today will make the Dow Jones Industrial Average even more representative of the evolving U.S. economy, as the Average--and the nation--enter a new century," Paul Steiger, managing editor of the Wall Street Journal, said in a statement.
Bill Milton, a computer analyst at Brown Brothers Harriman, told Reuters: "This is kind of a reflection of the obvious. The Dow has a lot of those old industrial names; now it's going to reflect the growing importance of technology in the economy."
Reuters contributed to this report.