Dow Jones Boots GM, Citibank
Dow Jones is pushing out newly bankrupt automaker General Motors and financial giant Citigroup from its industrials index in favor of Cisco Systems and Travelers Companies, Inc., respectively.
The move will be effective June 8 and reflects the two companies' turbulent recent history.
General Motors' removal is based on its bankruptcy filing Monday, which "immediately disqualifies a stock regardless of a company's history or its role as a cultural icon," said Robert Thompson, managing editor for the Wall Street Journal and editor-in-chief for Dow Jones, in a statement.
Thompson cited Citigroup's restructuring, which involves a large government stake, in the decision to replace the bank. Thompson indicated the move may have come earlier, if not for the turmoil plaguing the financial markets since the fall. He left the door open for Citigroup to reenter the index after its restructuring.
Travelers' addition is intended to give the financial sector greater representation after the loss of Citi and AIG, which was removed last year. Cisco's presence is a nod to the importance to communications and computer networking in the economy.
Dow Jones said that changes would not cause any "disruption in the level of the index."