How much was the 2008 Dow

After 110 years - GE is thrown out of the Dow Jones index

By Reuters Staff

New York (Reuters) - The US leading index Dow Jones loses its last founding member.

The American industrial icon General Electric (GE), which was the most valuable company in the world 13 years ago, will no longer be part of the highly regarded index of the New York Stock Exchange from next Tuesday - for the first time since 1907. The Siemens rival will be Replaced on June 26th among the 30 most important industrial companies in the USA by the drugstore chain Walgreens Boots Alliance, as the index provider S&P Dow Jones Indices announced. With the addition of Walgreens, the index better reflects the importance of consumers and the pharmaceutical industry to the US economy. Unlike the German stock index DAX, membership in the Dow Jones Index does not follow any quantitative criteria; changes are made at will.

The departure from the Dow Jones is all the more a sign of the decline of the former flagship of the US economy, which counts the inventor of the light bulb, Thomas Edison, among its founders. The Dow Jones Index is often accused of giving preference to old, traditional companies. GE's downward spiral began with its large-scale entry into the financial industry, which caused the company to be caught in the 2008 financial crisis. Since the high in August 2000, the price of GE shares has plummeted by 80 percent, in this year alone it has lost more than a quarter. "The announcement doesn't change our plans and our focus on creating a stronger, simpler GE," the company said on Wednesday night.

Former CEO Jeffrey Immelt tried to get rid of ailing business areas and cut GE back to its industrial core - from aircraft engines to power plants to locomotives - but could not stop the decline. Immelt relied on gas and steam turbines and was caught off guard again, this time by the energy transition. In industrial software, GE had to lower its ambitions last year. Immelt, who has been in office since 2000, had to leave, his successor John Flannery has announced that he will sell parts of the company worth $ 20 billion, including rail technology. Even the dividend for 2019 is questionable - GE was once considered a reliable dividend stock.

The 126-year-old GE is the only founding member of the now most highly regarded stock market index in the world that still belongs to it - but only for a few trading days. The Dow Jones Index was calculated for the first time in 1896. GE has been part of it without interruption since 1907.

From 1993 onwards, the conglomerate was, with brief interruptions, the most valuable listed company in the United States for twelve years. Siemens emulated the great model for years. Just two years ago, GE was among the "top ten" highest rated corporations in the world. Today the company is the sixth smallest value in the Dow Jones index with a market value of 112 billion dollars. The Munich industrial group Siemens comes to the equivalent of 114 billion. The share price is the lowest of all 30 Dow Jones stocks at less than $ 13.

For GE, however, the forced departure from the Dow Jones Index is more of a prestige issue than it is likely to put the stock under further pressure. After the decision, the paper gave way one percent, Walgreens shares rose three percent. The Dow Jones index may be the most cited in the world, but the broader S&P 500 index is far more important for US index funds. According to data from Lipper, ETFs on the “Dow” contain just around 20 billion dollars, while ETFs that replicate the S&P 500 contain 380 billion.