Travelers, Cisco Replace GM, Citigroup in Dow 30

The Dow Jones industrial average is adding Travelers Cos. and Cisco Systems Inc., dropping Citigroup Inc. and General Motors Corp.

The announcement Monday of the changes to the 30 stocks that make up the best-known barometer of Wall Street comes as GM enters bankruptcy protection, a move that was widely expected.

Dow Jones said Travelers, the property and casualty insurer and one-time division of Citicorp, would replace its former parent. Cisco, which makes computer networking gear, is filling the role left by GM after 83 years as part of the Dow.

The changes take effect June 8.

Dow Jones said it chose Travelers to increase the representation of the financial industry to the index. Dow dropped insurer American International Group Inc. in September after the federal government funneled billions to the company to keep it afloat during the financial crisis. Kraft Foods Inc. replaced AIG.

The company said the change in the fall left financials underrepresented in the index.

Dow Jones added Cisco “because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age – just as automobiles were essential to America in the 20th Century,” Wall Street Journal Managing Editor Robert Thomson said in a statement.

Changes occur rarely, though analysts widely expected GM would be replaced if it sought bankruptcy protection. GM was added twice, first for about a year and a half in 1915 and then in August 1925. Only General Electric Co. has been a component longer. The conglomerate has been in the index since the index began with 12 stocks in 1896.

Traders also expected Citigroup might come out as the company’s share price tumbled since last fall. Citigroup joined the Dow in March 1997 as Citicorp. Travelers merged with Citicorp to form Citigroup in 1998. Citigroup then spun off Travelers in 2002.

Dow Jones said it left Citigroup and GM as a part of the blue chip index longer than it might have in less volatile markets.

“The extraordinary conditions of the severe bear market and recession kept these stocks relevant and representative for a longer period than might have been the case in more normal times,” John A. Prestbo, editor and executive director of Dow Jones Indexes, said in a statement.

6/1/2009 10:28 AM TIM PARADIS AP Business Writer NEW YORK