Stocks: Golden Arches on the Dow

Along with the Senate and the Baseball Hall of Fame, the Dow Jones industrial average is among the most exclusive clubs in the U.S. Its members read like a Who’s Who of American industry. Stock prices for General Motors, IBM, Exxon, AT&T, U.S. Steel and 25 other blue-chip companies make up the widely watched Dow Jones average. Last week the editors of the Wall Street Journal, who choose the Dow’s members, reshuffled the club’s roster. Added to the list were McDonald’s, the fast-food giant, and Philip Morris, maker of Marlboro. Dropped from the index were American Brands, maker of Lucky Strikes, and General Foods, which produces Jell-O and other food products.

The change became necessary when Philip Morris bought General Foods. Philip Morris was a suitable replacement for General Foods, but then American Brands had to be dropped to avoid having two cigarette makers among the 30. The Journal editors also wanted to shift the index away from smokestack industries, which are overrepresented in the elite group. McDonald’s provided a golden opportunity and reflected the continuing growth of the service sector in the economy.