NEW YORK (Reuters) - Investment bank Goldman Sachs Group Inc
The three companies will replace Bank of America Corp
The changes will be effective on September 23, S&P Dow Jones Indices said in a statement.
The average, first established in 1896, includes 30 stocks, but very little money is indexed to its performance, unlike the broader S&P 500 or other indexes. In addition, because it is weighted by price, companies that are smaller in value with higher prices have more influence on the average.
"Wow - those are big changes," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
"The Dow is really an antiquated index. It is price-weighted, which makes no sense. But there are still are some people that pay attention to it, and some technicians, so it has an influence on some people."
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The index manager said the changes were prompted by the low stock price of the three companies slated for removal and a desire to diversify the make-up of the index.
Alcoa, in particular, has been seen as a candidate for elimination for some time, as the stock's market value of $8.5 billion is easily the lowest in the average.
It is the first three-for-three change to the index since April 8, 2004, when American International Group, Pfizer and Verizon replaced AT&T Corp, Eastman Kodak and International Paper.
The changes are the first in nearly a year, when UnitedHealth Group
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