Citi Gets The Dow Jones Ax While Travellers Flies In

(MoneyWatch) 
Times are tough at Citigroup. While the bank's stock still has some way to climb relative to its peers (whose shares are soaring in a market rally), Citi is now being excluded from the country's most prominent index.

Earlier today, Dow Jones said that Citi would soon lose its place among the 30 companies in the Dow Jones Industrial Index. In an ironic twist, one of the bank's ex-subsidiaries, insurer Travelers Companies, will take Citigroup's place among the helm of the nation's top firms. Citigroup sold Travellers seven years ago.

Dow Jones reports:

Travelers, meanwhile, has fared much better than most of its insurer counterparts over the course of the ongoing global financial crisis. Its shares are down 25% over the last two years - a relatively palatable decline compared to Citi's 93% tumble. The Dow Jones Industrial Average is down 38% over the same period.

Reaction to the change is mixed. While some think the decision to exclude Citi is only fair given the company's lousy performance lately, others suggest that the price, and the risk, of the Dow Jones Index is now considerably higher than it was previously.
The problem with switching Citi out of its current position right now, is that, whatever way you look at the change, the index has just become much less representative of the health of the economy in general. After all, Citi is still one of the nation's most prominent banks, in which billions of dollars of American folks' savings are stored. The bank is also one the biggest bailout recipients.

Had Dow Jones given Citi until the end of the year to turn its operations around, then at least it could have maintained that it was being fair to the concept of its product, which is to accurately guage the momentum of the economy.

Instead, it looks like the company is merely trying to take advantage of a recent rally in share prices to keep the index moving upwards.

Related Reading at BNET Finance:

• Dow Jones Unveils Most Pointless Index of Financial Crisis