Kraft Foods (KFT Quote - Cramer on KFT - Stock Picks) will replace AIG (AIG Quote - Cramer on AIG - Stock Picks) as a component in the Dow Jones Industrial Average on Monday, leaving the index underweighted in financials following the recent turmoil in the stock market.
AIG's removal comes after a tumultuous week for the
insurer, which was aided by the
Federal Reserve through an $85 billion bailout that potentially kept the company from seeking bankruptcy protection. AIG has been a component of the Dow since April 1, 2004.
Kraft was once part of former Dow component
Altria (MO Quote - Cramer on MO - Stock Picks) before being spun off.
"We are refraining at this point from adding another stock in the financial industry because of the extremely unsettled conditions," said Robert Thomson, managing editor of
The Wall Street Journal. The
WSJ's top news editor is responsible for the makeup of the 112-year-old stock index. "We realize this decision leaves the Dow Jones Industrial Average underweighted in financials, and we will address this situation in due course," he added.
Dow Jones, part of
News Corp. (NWS Quote - Cramer on NWS - Stock Picks), said the changes won't cause any disruption in the level of the index. The divisor used to calculate the Dow from its components' prices on their respective home exchanges will be changed prior to the market's open on Sept. 22.
AIG's replacement by Kraft is the second change to the Dow this year. On Feb. 19,
Bank of America (BAC Quote - Cramer on BAC - Stock Picks) and
Chevron (BAC Quote - Cramer on BAC - Stock Picks) took spots vacated by
Honeywell (HON Quote - Cramer on HON - Stock Picks) and Altria. By comparison, only two changes were made to the component makeup of the Dow in the 10 years previous.
Robert Holmes
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