NEW YORK (Reuters) - The Dow Jones industrial average <.DJI> is adding Bank of America Corp and Chevron Corp , the first change to the blue-chip stock index in almost four years, Dow Jones & Co said on Monday.
Altria Group Inc
The planned spin-off of Philip Morris International Inc from Altria, which will leave it a purely domestic tobacco company, prompted the change in the Dow's make-up, said Marcus Brauchli, managing editor of The Wall Street Journal.
The Dow's composition is determined by editors of the Journal, which is published by Dow Jones, a unit of News Corp
The change is the first in the 111-year-old index since April 2004, when three stocks were replaced.
"Adding a financial to an index labeled industrials may modify the usefulness of the Dow," said Alan Gayle, senior investment strategist at Trusco Capital Management in Atlanta.
Investors look to the Nasdaq for a snapshot of what is happening in the technology sector, and the Dow will often give investors a different look at industrials, he said.
"It would appear, on the surface, the index committee is looking for broader representation. But it does now look like it has less of an industrial flavor to it," Gayle said.
Very few investors use the Dow as a guide for a portfolio's composition, said Mark Coffelt, president and chief investment officer at Empiric Funds in Austin, Texas.
"What the Dow does is it gives everyone a quick shorthand of what the markets are doing," he said. "Honeywell has faded while Altria is spinning off Philip Morris, so this makes sense."
All four stocks were down in early trade as the Dow slid 0.82 percent to 12,082.80. Bank of America slid 0.71 percent to $41.86, Chevron was off 74 percent at $78.68, Honeywell fell 1.04 percent to $57.23 and Altria declined 0.62 percent to $72.64.
There are no predetermined criteria for a stock to be added or deleted, Dow Jones said. However, the editors who maintain the index "intend that all components be established U.S. companies that are leaders in their industries," said John Prestbo, editor of Dow Jones Indexes.
(Reporting by Herb Lash and Jennifer Ablan; Editing by Jonathan Oatis)
