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It's a new day for the Dow Jones Industrial Average (DJINDICES: ^DJI ) , as three new companies join the ranks: Goldman Sachs (NYSE: GS ) , Nike, and Visa (NYSE: V ) , which replaced Alcoa, Bank of America (NYSE: BAC ) , and computer giant Hewlett-Packard. Instead of a party atmosphere, however, the Dow continues to look wan, as does the S&P 500.
More than an hour before noon, a lot has happened that may have contributed to the Dow's poutiness. Financials are creating a stir, starting with an interesting tidbit concerning B of A.
Bank of America leaves a void
An article on The Wall Street Journal MoneyBeat this morning notes that Bank of America's exit from the Dow might have some unexpected consequences for the index. Compared to its growth prospects of 6.9% before the change, the Dow is expected to experience growth through the end of 2014 of only 5%.
This, the article says, is due to the absence of B of A, which analysts anticipate will show a higher rate of growth than other Dow components over the same period of time. For third-quarter earnings, overall growth for the index will probably be in the neighborhood of 0.6%, versus the 2.8% that would have transpired had B of A kept its spot on the Dow.
Citigroup hits the skids
Financial companies are looking glum, particularly following a news bite concerning Citigroup (NYSE: C ) . The Financial Times reported that conversations between the bank and its investors have revealed that Citi plans to report a big dip in trading revenues of more than 10% in its third-quarter results next month.
Preannouncing lousy earnings is never a positive thing -- just ask BlackBerry -- and the news had the effect of knocking Citi's share price down a few pegs. The stock is down more than 3% so far today, and peers JPMorgan Chase and Goldman Sachs are dropping like stones, as well, with newcomer Goldman's stock down nearly as much as Citi's.
Fellow newbie Visa is down more than 1%, though some of that loss may be due to its agreement, along with fellow credit card issuer MasterCard, to drastically cut its processing fees in France -- where regulators have been pressuring the companies to reduce such charges.