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Nearly Five Years Later, a Vastly Different Dow

NYSE Clerks in the 1990's
NYSE Clerks in the 1990's

While this week’s rise toward 13,000 may be reminiscent of April 2007, today’s Dow Jones Industrial Average is quite different in composition than the average that hit that level nearly five years ago.

The Dow industrials settled above 13,000 for the first time ever back in spring 2007, a mere six months after its first close above 12,000.

Since April 2007, however, five companies were removed from the index: Altria Group, Honeywell International, American International Group, General Motors, and Citigroup; these were replaced by Bank of America, Chevron, Kraft Foods, Travelers Companies, and Cisco Systems.

Symbol
Price
 
Change
%Change
NOVU
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SC0Y
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CSCO
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CVX
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GM
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HON
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MDLZ
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MO
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TRV
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With those changes and the various price movements — the Dow industrial average is price-weighted, giving higher-priced stocks greater impact — there has been a notable shift in the exposure the Dow industrials provide to investors.

Energy, for example, currently accounts for 11 percent of the index weighting, compared with 5 percent back in 2007.


Arguably, the Dow industrial average has also become less balanced in recent years. Back in April 2007, about 80 percent of its 30 stocks had relatively moderate individual weightings between 2 percent and 5 percent. Today, only half on the average’s stocks are in that middle range.

Stocks such as International Business Machines, currently make up a dominant 11 percent of the average, compared to a 6 percent weighting five years ago. Additionally, while none of the Dow industrial components had weightings of less than 1 percent in 2007, Alcoa and Bank of America have such tiny weightings now that they are essentially insignificant to the index movements.