For the first time since 1995, shares of Dow component American Express traded below $10 on Friday. It became the sixth current Dow component to trade with a single-digit price tag, joining General Electric , Alcoa , Bank of America , General Motors , and Citigroup .
Unlike the S&P 500 , which is weighted by market cap, the Dow Industrials is a price-weighted index. Because of this, higher-priced stocks impact the index’s performance more than lower-priced stocks. With an enormous one fifth of the index’s 30 components trading below $10, the blue chip index has endured increased scrutiny of late, as many people argue that those stocks are now having a fairly negligible impact on the overall index. (Read: What it Takes to Move the Dow)
Having 6 stocks simultaneously under $10 / share in the Dow Industrials has never happened during at least the past 40 years. In fact, according to Dow Jones Indexes, only twice before within that period has the Dow had 3 members concurrently trading below $10. Back in December 1974, Dow components Chrysler, F.W. Woolworth, and Westinghouse Electric all traded under $10, and in the summer of 1982, Navistar International, Manville, and Inco traded below $10 at the same time.
However, having a single-digit price tag does not necessarily justify a stock’s immediate removal from the index. Since 1970, a total of 14 companies have closed below $10 while being part of the Dow Industrials. Some, like AIG and Woolworth, were removed soon after their prices fell below the $10 threshold, while others, like Bethlehem Steel and Navistar International, remained in the index for a far longer period.
Here are the 14 companies** that have traded below $10 during their inclusion on the Dow Jones Industrial Average:
First Date Days Closed Under $10
Below $10 as a Dow Component
Westinghouse Electric 9/4/1974 73
Chrysler 10/23/1974 191
F.W. Woolworth 11/29/1974 25
(formerly International Harvester) 9/4/1981 2,217
Inco 6/1/1982 144
Manville 6/4/1982 36
Bethlehem Steel 7/28/1986 299
AT&T (not SBC) 6/12/2002 22
General Motors 7/2/2008 120*
American International Group 9/15/2008 5
Alcoa 10/23/2008 63*
Citigroup (formerly Travelers) 11/12/2008 77*
Bank of America 1/15/2009 35*
General Electric 2/20/2009 11*
**American Express is excluded from list, as it closed above $10 on Friday, after falling below $10 during the day
Source: Dow Jones Indexes
Furthermore, of the 6 current Dow components that traded under $10 last week, 3 traded below the $5 level (Bank of America, General Motors, and Citigroup). Dow Jones Indexes points out that since 1970, the only other Dow members to trade below the $5 threshold were Bethlehem Steel and Navistar International.
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