Alcoa (AA), Hewlett-Packard (HPQ) and Bank of America (BAC) will be dropped from the Dow Jones Industrial Average next week, in the biggest shakeup of the 30-stock index in almost a decade.
- Alcoa, a Dow component for 54 years, will be replaced by athletic-gear maker Nike (NKE) . Payments company Visa (V) will replace H-P, which joined the index in 1997, and securities firm Goldman Sachs Group (GS) will supplant Bank of America, which spent five years in the blue-chip benchmark.
- The Dow is a price-weighted measure, meaning the bigger the stock price, the larger the sway for a particular component, and vice versa. That is different from indexes such as the Standard & Poor's 500, which are weighted by components' market capitalizations.
- Despite the popularity of the Dow Jones Industrial Average in the press, it's a lot less significant than an add to the Russell 2000 or an add to the S&P 500, because it's just not an index that institutions benchmark to.
