Out with the old, in with the new. There will be a change in one of the Dow stocks as Kraft Foods (KFT, $33.31, up $0.66) will replace American International Group (AIG, $2.40, up $0.35) as one of the Dow’s 30 components. The change will take place next Monday.
Well, it’s about time. Although AIG does not have a big percentage weight on the Dow (currently at 0.16%) now, it’s freefall in its stock price did have an affect on the market. Thank goodness they replaced it with a food company rather than another financial stock (sly grin).
AIG is being removed because of the Federal Reserve’s $85 billion emergency bailout. Kraft was a “safe” pick and if you will recall, spun off by Altria Group (MO, $20.53, up $0.67). It looks like Warren Buffett has done it again. He is Kraft’s biggest stakeholder and controls about 10% of the company. Mr B. has about, oh, 138 million shares worth a cool $4 billion. Wow.
The Dow is staying above water, up 61 points to 10,671 but a lot of technical damage has been done. The VIX (VIX, 36.68, up 0.46) has spiked above 30 this week and that is usually a good sign that we may be nearing a bottom. However, it’s quite possible that the VIX could headed to the 40’s if the market continues lower.