The Dow Becomes More Finance Heavy

Dow Jones & Co. announced changes to its prestigious Industrial Average yesterday. Altria Group (MO) and Honeywell (HON) are being dropped. Bank of America (BAC) and Chevron (CVX) will be added.

Dropping Honeywell is a bit odd since the company has been doing well for a prolonged period. Honeywell's predecessor company, Allied Chemical, was added to the Dow average in 1925. Honeywell's comparatively small size was cited as the reason for removing it, yet there are three stocks that remain in the index that have even smaller market capitalizations. General Motors (GM), a seriously troubled company, is one of them.

Chevron was previously in the Dow index. It was dropped in 1999 when both Microsoft (MSFT) and Intel (INTC) were added, which marked the first time (and so far the only time) Nasdaq-listed stocks were added to the index. This raised expectations that more would follow. Some observers are disappointed that yesterday's additions did not include a mega-cap technology company such as Google (GOOG) and Oracle (ORCL).

Bank of America's inclusion increases the Dow's weighting in financials. The Dow also includes JPMorgan Chase (JPM), Citigroup (C) American International Group (AIG), and American Express (AXP). Is this the committee's way of signaling a bottom in this beaten up sector?