Posted on 06/01/2009 9:34:56 PM PDT by bruinbirdman
General Motors and Citigroup were kicked out of the closely watched Dow Jones industrial average on Monday, marking a historic fall from grace for two once venerable American corporations.
In a widely anticipated move, Dow Jones & Co said technology bellwether Cisco Systems Inc (CSCO.O) will replace GM, which filed for bankruptcy on Monday morning. Travelers Co (TRV.N), a large home, auto and commercial insurer, will take the place of Citigroup due to the bank's restructuring and the government's "large and ongoing stake."
The changes marked the latest fallout on the financial landscape from the collapse of the U.S. housing market, when home prices plunged after years of running higher as credit markets froze. The turmoil helped drive Lehman Brothers into bankruptcy last September, shaking Wall Street to its core and prompting the U.S. government to create a $700 billion financial rescue fund. The U.S. Treasury plans to use about $30 billion of that bailout money to buy a stake in GM.
GM's bankruptcy is the third-largest Chapter 11 case in U.S. history, ranking only behind Lehman Brothers and WorldCom in terms of size.
One factor that helped seal GM's fate was the surge in U.S. oil futures prices to record highs near $150 a barrel last July. That drove gasoline prices up to around $4 a gallon and helped kill demand for Detroit's gas-guzzling best sellers, the sport utility vehicles, or SUVs.
GM's removal from the Dow ended its 83-year run in the blue-chip industrial average, which has just 30 components. The only other stock with a longer history is General Electric (GE.N), which was in the original Dow in 1896.
"We thought it was a fitting replacement for General Motors because Cisco with its products is really the pavement on the information highway and it's helping shape the
(Excerpt) Read more at reuters.com ...
o.how.the.mighty.have.you-know-what.
So is this why the Dow was up today?
I thought that was just for banks? When did automakers get Legislated into it?
Travelers is down around 40% from mid 2007, so there may be more substitutes....
The bond market is what is tanking,,,,we are truly doomed!
H.R. 7321, Auto Industry Financing and Restructuring Act, passed, December 11, 2008, allowed TARP money to be used for the Auto bailout.
Many mutual funds, pension funds and other institutionals are obligated by perspectus to own Dow 30 Ind. They had to add Cisco and Travelers.
yitbos
We need a new index. GOBA maybe? Government Owned Business Average?
Your elected liberal government at work.
I don't know, but I'm glad I don't own stock in G.M.! On the other hand, my Cisco stock went up 5 percent today. Whatever happened, many stocks were lifted today. Crazy times.
Yep, just change the definition and the numbers
under $20 billion left to cover failed bank deposits.
what do you think happens when a bank fails... and there is no money left to cover the deposits of the account holders?
yup, you guessed it... a run on the banks where people will be trying to pull their money out just like in 1929
at which point, gold will skyrocket (then again, so will bread)
yitbos
Why not just get rid of all industry? Most of it’s not doing so well.
General Motor’s new symbol: GMGMQ
Trading at $0.68 to $0.70 today.
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