Rejiggered Dow Misses Bank of America Already

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.

It's easy to be a global investor -- here's how
Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report " 3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2649649, ~/Articles/ArticleHandler.aspx, 10/26/2014 12:54:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement