Please ensure Javascript is enabled for purposes of website accessibility

Dow Surges After Announcing Biggest Shake-Up in a Decade

By Daniel Miller - Sep 10, 2013 at 3:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Three Dow components will be replaced. Here are the details and some of the Dow's movers and shakers.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (^DJI 1.27%) is headed higher today, up 0.75% as of 3 p.m. EDT. Markets have climbed higher today as anxiety regarding U.S. military action in Syria eased after the country announced it would hand its chemical weapons over to international authorities. Though the U.S. still hasn't ruled out a possible military strike, it would seem tensions are significantly reduced after the announcement. In other news, S&P Dow Jones Indices announced that it will replace three Dow components after the market closes on Sept. 20. Here are the details of that announcement and today's big movers.

Shaking it up!
Effective Sept. 23, Nike (NKE 1.73%) will replace Alcoa, Goldman Sachs Group will replace Bank of America, and Visa will replace Hewlett-Packard. Following the news, shares of Nike gained 1.7%; Visa shares rose 2.9%; and Goldman Sachs climbed 3.6%. It's the biggest shake-up in a decade, and Nike is the first apparel inclusion since 1933, according to S&P Dow Jones Indices records.

A McDonald's remodeled interior. Photo credit: McDonald's

McDonald's (MCD 1.12%) is up 0.3% after the company released its August comparable-store sales numbers. Its global comparable-store sales increased 1.9%, beating estimates. That being said, year-to-date figures paint a darker picture: Global comparable-store sales are up only 0.4% through August compared with a 4.4% increase through the same time frame last year.

In the long term, McDonald's has a battle on its hands as competition continues to focus on older generations with fresh foods and a modern store appeal, while Ronald McDonald and his happy meals continue to play the kids' game. It's a move that could hinder future sales growth, as McDonald's didn't rank in the Millennial generation's top 10 restaurant chains, according to Ad Age. McDonald's isn't ignoring that now, and it plans to reimage 1,600 stores and upgrade its menu offerings.

Cisco (CSCO 1.55%) is trading higher today, up 1.3% after it agreed to buy privately held Whiptail for $415 million. The company is a provider of solid-state memory systems that Cisco can use as new tools for data storage. This is just another small piece of the puzzle as Cisco continues to acquire small companies to try to evolve its business.

"We are focused on providing a converged infrastructure including compute, network and high-performance solid state that will help address our customers' requirements for next-generation computing environments," said Paul Perez, vice president and general manager of the Cisco computing-systems product group, in a Cisco press release.

In other overseas news, China's National Bureau of Statistics reported that August retail sales rose 13.4% year over year and 1.17% over the prior month, according to Morningstar. This may have provided an additional boost for Ford (F 2.21%) and General Motors, which are up 1.7% and 1.6%, respectively, as both eye China as a huge growth opportunity. As China continues to evolve into a consumption economy and the middle class grows, some analysts predict that automotive sales will go from roughly 19 million annually to nearly 30 million -- an astounding increase and nearly the amount all automakers sold in Europe last year.

Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Cisco Systems, Ford, McDonald's, and Nike. The Motley Fool owns shares of Ford, McDonald's, and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,761.05 (1.27%) $424.38
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$262.18 (1.12%) $2.90
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
CSCO
$46.61 (1.55%) $0.71
Ford Motor Company Stock Quote
Ford Motor Company
F
$16.18 (2.21%) $0.35
NIKE, Inc. Stock Quote
NIKE, Inc.
NKE
$116.07 (1.73%) $1.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.