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."
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