The Dow Jones Industrial Average’s reshuffling last year helps explain why the gauge has failed to keep pace with other U.S. stock benchmarks this year.
The CHART OF THE DAY compares the performance of three stocks that joined the Dow in September -- Goldman Sachs Group Inc., Nike Inc. and Visa Inc. -- with the shares they replaced. Each group is represented by a price-weighted index, the same method used to calculate the average.
Goldman, Nike and Visa all were lower for the year as of yesterday. Visa, based in San Francisco, had the highest weight among the Dow industrials’ 30 stocks: 8.3 percent, according to data compiled by Bloomberg. New York-based Goldman was third at
6.6 percent. Nike, based in Beaverton, Oregon, was 2.9 percent.
Only one of the stocks removed from the average, Bank of America Corp., had a year-to-date loss as of yesterday. Shares of the Charlotte, North Carolina-based company were 0.3 percent lower. Hewlett-Packard Co., based in Palo Alto, California, was 26 percent higher. Alcoa Inc., based in New York, had a gain of 61 percent.
HP’s move was in line with rallies for Cisco Systems Inc., Intel Corp. and Microsoft Corp., technology companies that are still in the Dow. All three have relatively low stock prices, which limited their total weighting to 4 percent yesterday.
Thirteen stocks in the Dow industrials ended yesterday’s trading with 2014 losses. The average was 3.2 percent higher, which trailed the Standard & Poor’s 500 Index’s 7.3 percent advance and the Nasdaq Composite Index’s 6.7 percent gain.