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Money News

126 Year-Old General Electric Has Been Kicked Off the Dow

June 20, 2018

The Dow Jones Industrial Average (DJIA) announced it will drop General Electric (GE) from the index.

2 min read

GE, a 126-year-old company that was at one time one of the most valuable companies in the U.S., has lost it place on the Dow Jones Industrial Average (DJIA).

The Dow will replace it with drugstore chain Walgreen Boots Alliance, a company the managers of the Dow index say represents growing aspects of the economy.

GE, founded by Thomas Edison in 1892,  was one of the original members of the Dow.

Why this is a big deal

When the Dow was created in 1896, GE was the most valuable company on the index.

GE’s stock has fallen by more than half since June 2017, according to reports, and its decline over the past decade or so has culminated in the decision by S&P Dow Jones Indices, which manages the index, to give it the boot.

“General Electric was an original member of the DJIA in 1896 and a member continuously since 1907,” David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices said in a press release. “Since then the U.S. economy has changed: consumer, finance, healthcare, and technology companies are more prominent today and…with [Walgreens] addition, the DJIA will be more representative of the consumer and health care sectors of the U.S. economy.”

Read more: Social media company Twitter recently joined the S&P 500, replacing agricultural chemical company Monsanto.

What you need to know:

Dinosaurs go extinct

GE has struggled to stay relevant in an evolving economy. For many years, manufacturing (of several types, including electric appliances, airplane engines, and even computers) was GE’s bread and butter. But the industry has been in a tailspin, domestically, since the financial crisis in 2008.

The company’s stock was a staple in many investors’ portfolios over the years, as a blue-chip stock with dependable dividends.

Other companies that have dropped from the Dow

The Dow has evolved over the years, and GE was the last company founded in the 19th-century company listed on the index. But the Dow’s makeup has changed more than 50 times since its inception. Many other famous companies have lost their iconic status on the Dow over the years, and have been removed from the index as their businesses have suffered in one way or another.

These include:

Key Terms:

Index: A collection of stocks or bonds that takes the measure of a market.

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By Sam Becker

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