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.
removal comes after a tumultuous week for the
, which was aided by the
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.
Cramer on AIG Rescue
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Kraft was once part of former Dow component
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
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
, 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
took spots vacated by
and Altria. By comparison, only two changes were made to the component makeup of the Dow in the 10 years previous.
For the sake of continuity, composition changes are intentionally rare, said John Prestbo, editor of
Dow Jones Indexes
, "although this time change was forced by the effective nationalization of AIG and its very low stock price. There are no predetermined criteria for a stock to be added or deleted, though we intend that all components be established U.S. companies that are leaders in their industries."