The Goldman Sachs Group Inc. (GS) will be added to the Dow Jones Industrial Average this month, replacing mega bank Bank of America (BAC), the Index Committee announced Tuesday.
So what does this changing of the guard mean? Perhaps, the age of BofA – a mega bank that has struggled somewhat with legacy Countrywide mortgages in the wake of the financial crisis – is over for now.
But the Dow Jones had a more direct answer to that question. BofA – along with two other stocks – were replaced because of the low stock price of the companies involved and a desire to “diversify the sector and industry group representation of the index.”
BofA is not the only index component replaced this week. Visa Inc. (V) is replacing Hewlett-Packard Co. (HPQ) and Nike Inc. (NKE) is replacing Alcoa (AA). The changes take effect after the close of trading on Friday, Sept. 20.
So for now, it's hello, Goldman Sachs, and goodbye BofA. The Dow picks no favorites, and it seems BofA's stock price is no longer reflective of the type of stock that makes the cut.
