Kraft Foods to Replace AIG in Dow

Thursday, September 18, 2008 | 09:38 AM

Wow, that didn't take long . . . effective September 22 (Monday).

AIG, which joined the Dow in 2004, is the latest in a series of disastrous Dow picks: Microsoft, Intel, and Home Depot . . .

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Here is the statement from the Dow committee, via the WSJ:

Kraft Foods Inc. will replace American International Group Inc. in the Dow Jones Industrial Average effective Monday, a further sign of the woes afflicting the insurance giant.

The change comes as the federal government late Tuesday agreed to take over the troubled insurance giant in an $85 billion bailout.

The composition of the Dow industrials was last changed in February, when Bank of America Corp. and Chevron Corp. replaced former Kraft parent Altria Group Inc. and Honeywell International Inc.

Robert Thomson, managing editor of The Wall Street Journal and overseer of the Dow's makeup, said not adding a financial company to replace AIG is prudent at this time "because of the extremely unsettled conditions." He added Kraft was added because the index has no food companies.

Dow Jones Indexes editor John Prestbo said pulling AIG from the index stemmed from AIG's "effective nationalization ... and its very low stock price."

Shares have tumbled 90% this month as investors got increasingly concerned about AIG's ability to raise capital. That crisis of confidence, coupled with credit-rating downgrades earlier this week, effectively forced the government to step in after private entities refused to help in the firm's rescue without risk guarantees.

AIG joined the Dow industrials on April 1, 2004.

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Source:
Kraft to Replace AIG in Dow
KEVIN KINGSBURY
WSJ, SEPTEMBER 18, 2008, 9:34 A.M. ET
http://online.wsj.com/article/SB122174423720252297.html

Thursday, September 18, 2008 | 09:38 AM | Permalink | Comments (18) | TrackBack (0)
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Comments

OK, I will be the first to say it: That's cheesy.

The way America is going, Campbell's Soup will replace Bank of America.

Posted by: CNBC Sucks | Sep 18, 2008 9:51:34 AM

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