Submitted by Fox First at Ten on September 14th
NEW YORK (AP) - UnitedHealth Group, the health insurance company, will replace Kraft Foods in the Dow Jones industrial average, the most widely known barometer of the American stock market.
S&P Dow Jones Indices, which manages the Dow, said Friday that the change will take effect at the start of trading Sept. 24. It said the change reflected the growing importance of health care spending in the U.S. economy.
The change will not affect the level of the Dow, which ended Thursday at a four-year high and is closing in on a record. The formula used to calculate the Dow is recalibrated for each stock added and dropped.
The last change to the Dow was in June 2009, when Cisco Systems, the technology company, and Travelers, another insurer, were added. They replaced General Motors and Citigroup.
S&P Dow Jones Indices said that the change was also prompted by Kraft's plan to spin off its North American grocery business in October. Kraft was added to the Dow in September 2008, when it replaced the crippled insurer AIG.
David Blitzer, managing director and chairman of the S&P index committee, told CNBC on Friday that the managers of the Dow average "looked seriously at half a dozen stocks." He declined to name a runner-up.
"Just about everybody has called up and whispered Apple in one ear and Google in one ear," he said. He said technology stocks were well-represented in the Dow, which includes IBM.
Apple, the most valuable company in American history, is included in the Nasdaq composite index and the Standard & Poor's 500, a broader measure of the stock market, but not the Dow.
In May, Bespoke Investment Group, which crunches numbers about the financial markets, calculated that the Dow would be above 15,000 if Apple had been added to the Dow in 2009.
The Dow closed Thursday at 13,539.86, about 625 points shy of its all-time high, reached in October 2007.
UnitedHealth stock climbed 3 percent in before-market trading after the announcement that it was joining the Dow 30.
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