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Alcoa dropped from Dow Jones index

Keywords: Tags  Alcoa, aluminum, Dow Jones industrial index, Nike, Edward Meir, INTL FCStone, Bank of America, Hewlett-Packard Standard & Poor's


NEW YORK — Alcoa Inc. has been dropped from the Dow Jones industrial index after 54 years and has been replaced by Nike Inc., S&P Dow Jones Indices announced Sept. 10.

Analysts told AMM that the news had been expected for months as Alcoa makes up a small part of the market and focuses on international business.

"It doesn’t really matter and has no impact—more of a changing of the guard and the loss of prestige from being out of the index," Edward Meir, analyst at New York-based INTL FCStone Inc., said in an e-mail. "Maybe some selling in some index portfolios will occur as a result, otherwise it’s a non-event."

The Pittsburgh-based aluminum manufacturer, as well as Charlotte, N.C.-based Bank of America Corp. and Palo Alto, Calif.-based Hewlett-Packard Co., were dropped because of low stock prices and to add more diversity to the industry representation in the index, Dow Jones Indices said. Alcoa shares closed at $8.06 apiece Sept. 10, down 13.4 percent from a year-to-date high of $9.31 and 83 percent below an all-time high of $47.35 in July 2007.

"Alcoa has suffered as a stock because the aluminum market has been in a perceived surplus position for years," Standard & Poor’s Corp. equity analyst Philip Kaukonen said. "Stock numbers at (London Metal Exchange-approved warehouses) have been persistent." Nearly 5.4 million tonnes of aluminum are stocked in LME-registered warehouses.

Alcoa’s removal from the index will not affect its business strategy and it plans to focus on new growth opportunities in industries such as aerospace and automotive, the company said.


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