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Dow Jones: Kraft Out, UnitedHealth In

After roughly three years, the Dow Jones Industrial Average is letting a new kid into the clubhouse.

S&P Dow Jones Indices, which runs the DJIA, said Friday morning that health insurer UnitedHealth Group (NYSE:UNH) will join the index Sept. 24, when Kraft Foods (NASDAQ:KFT) exits after just less than four years.

The index committee said UnitedHealth Group’s addition “reflects the growing importance of health care spending in the U.S. economy.” Indeed, UnitedHealth Group will be the sole health insurer on the Dow Jones, and will be one of only two companies in the overall insurance business, with Travelers (NYSE:TRV) being the other.

S&P Dow Jones Indices said it will reconfigure the DJIA’s formula so there will be no change in the level of the index caused by UNH’s addition alone.

Committee managing director David Blitzer told CNBC that Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) were among stocks that many pressed to join the index, according to the Associated Press.

Kraft was dropped from the index in anticipation of the spin-off of its North American grocery business, to be named Kraft Foods Group, after which the remaining international snacks business will be renamed Mondelez. The resulting company’s resulting smaller market cap and lower revenue generated from the U.S. “makes the company less representative of the U.S. Large Cap market space,” the Indices said.

UnitedHealth is the first addition to the index since June 2009, when tech giant Cisco (NASDAQ:CSCO) joined.

UNH shares opened up more than 1% early Friday, while KFT shares were down less than 1%.

Kyle Woodley is the Assistant Editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @IPKyleWoodley.

Article printed from InvestorPlace Media, https://investorplace.com/2012/09/dow-jones-kraft-out-unitedhealth-in-kft-unh/.

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