Dow Will Add Disney, Morgan and Caterpillar


Mickey Mouse as an industrial stock?

Burbank-based Walt Disney Co. will become one of the 30 stocks in the Dow Jones industrial average starting Monday, as Dow Jones & Co. tilts its famed index further toward the services economy and away from its manufacturing roots.

Disney, the first pure entertainment stock in the Dow, will replace USX Corp., one of the nation’s industrial giants, which is expected to be split into separate oil and steel companies this year.

Also on Monday, Dow Jones will add construction-equipment giant Caterpillar to the index, replacing truck maker Navistar, and J. P. Morgan, one of the nation’s premier banks, will replace financial services firm Primerica.


The three-stock switch is the biggest change in the Dow since July 18, 1930, when Chevron, Eastman Kodak and Goodyear were added. The last change was March 12, 1987, when Boeing and Coca-Cola replaced Owens-Illinois and nickel-producer Inco Ltd.

Dow Jones had been expected to kick USX, formerly U.S. Steel Corp., out of the index after its division into two entities because three oil companies and a steel company are already represented. But many Wall Streeters were surprised by the hat-trick decision Thursday.

“We don’t make a habit of fiddling with the makeup of the industrial average because consistency along with longevity are among its important attributes,” said Norman Pearlstine, managing editor of the Wall Street Journal (Dow Jones’ flagship publication), in a statement.

“But, in fact, the average has always been a dynamic index, not a static artifact,” he said. The substitutions, Pearlstine said, were in keeping with Dow Jones’ efforts to make the index “reflect changes in the stock market and the economy.”


The inclusion of Disney in the index is the major change, because Caterpillar for Navistar and J. P. Morgan for Primerica are viewed more as “upgrades” of businesses already represented in the Dow.

Disney, which operates amusement parks and produces movies, will give the index a heavier weighting in the services sector of the economy, which now represents two-thirds of gross national product, said A. C. Moore, investment strategist at Argus Management in Santa Barbara.

Most of the substitutions Dow Jones has made since 1979 have been services companies (American Express in 1982 and McDonald’s in 1985) or consumer-products companies (drug firm Merck in 1979, Philip Morris in 1985 and Coca-Cola in 1987).

NEW LINEUP FOR THE DOW 30 Dow Jones & Co. announced three stock substitutions in its 30-stock industrial average on Thursday:

In Walt Disney Co. Caterpillar J. P. Morgan Out

USX Corp.