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It's A Deal

By Tom Granahan, IDD Magazine

June 1, 2009

A Day For The Ages

What a difference a day makes. And what a difference a once-in-a-lifetime global financial crisis makes.

In the span of about an hour this morning, the demise of two American business icons was completed, if only symbolically. The bankruptcy filing of GM, and the removal of Citi and GM from the Dow Jones Industrial Average, can be described in any number of ways, but “surprise” isn’t one of them. Yet it’s still impossible not to reflect upon how hard these icons have fallen. How ironic that they came down on the same day.

As a reporter covering the stock market about a decade ago, I remember the anticipation that would roll around every time the Dow Industrials were up for a rejiggering. There was never any shortage of opinion as to who was in and who was out – the only thing in short supply was usually accuracy. Would Intel make it in? Microsoft? It’s definitely gonna be Amazon’s turn this time! Why is Kodak still in there?

Citi, of course, never came up in the discussion. After all, how could you offer investors a barometer of the U.S. stock market without its most trusted and largest bank? You couldn’t, of course, but now you can, because Citi is neither.

As for GM’s filing, and removal from the 30-stock index, the writing’s been on the whitewalls for months, but it still stings to see it in print. (Bankruptcy, by the way, is an automatic deal-breaker for being a Dow component.) Most observers agree the restructuring is probably for the best, though the devil most certainly will be in the details.

No more Citi and no more GM in the Dow. What a remarkable day, regardless of whether we knew it was coming.   

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Tom Granahan

Tom Granahan is the Editor of IDD. He has more than 15 years of financial-journalism experience, having written about the stock market for Dow Jones Newswires and The Wall Street Journal for several years. He also supervised the Newswires' U.S. bureaus, and was the founding editor of Dow Jones Market Talk, which some consider to be one of the earliest forms of financial-news blogging. He graduated with a BA in journalism from Temple University in his hometown of Philadelphia.

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