updated 6/1/2009 1:47:42 PM ET 2009-06-01T17:47:42

The Dow Jones industrial average is the latest Wall Street institution to be reshaped by the financial crisis.

Major Market Indices

The stock market's best-known barometer is adding Travelers Cos. and Cisco Systems Inc., replacing Citigroup Inc. and General Motors Corp. The move comes as GM enters bankruptcy protection, a move that was widely expected.

Dow Jones said Travelers, the property and casualty insurer and one-time division of Citicorp, would replace its former parent. Cisco, which makes computer networking gear, is filling the role left by GM after 83 years as part of the Dow.

The changes to the 30-stock index take effect June 8.

The selection of Travelers helps maintain the representation of the financial industry in the index. Dow dropped insurer American International Group Inc. in September after the federal government funneled billions to the company to keep it afloat during the financial crisis. Kraft Foods Inc. replaced AIG.

The company said the change last fall left financials underrepresented in the Dow because the government has, through bailout money, become a major Citigroup shareholder and reduced its role as a publicly held company.

"We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake," Wall Street Journal Managing Editor Robert Thomson said in a statement.

Dow Jones added Cisco "because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age — just as automobiles were essential to America in the 20th Century," Thomson said. He has the final say on changes to the index.

Cisco can replace GM also because the aim of the index is to reflect most major industries, except for utilities and transportation companies, which are accounted for by other indexes.

Changes occur rarely, though GM's removal was expected because bankruptcy disqualifies a company from being part of the index.

GM shares fell as low as 27 cents in Monday morning trading, their lowest price in the company's 100-year history. Shares of the automaker have lost 99 percent of their value since touching a multiyear high in October 2007. The Dow is down 40 percent from its record high of 14,164.53 in October 2007.

GM was added to the Dow twice, first for about a year and a half in 1915 and then in August 1925. Only General Electric Co. has been a component longer. The conglomerate has been in the index since it began with 12 stocks in 1896.

Traders also expected Citigroup might be removed from the Dow as the company's share price tumbled since last fall. Citigroup joined the Dow in March 1997 as Citicorp. Travelers merged with Citicorp to form Citigroup in 1998. Citigroup then spun off Travelers in 2002.

Dow Jones said it left Citigroup and GM as a part of the blue chip index longer than it might have in less volatile markets.

"The extraordinary conditions of the severe bear market and recession kept these stocks relevant and representative for a longer period than might have been the case in more normal times," John Prestbo, editor and executive director of Dow Jones Indexes, said in a statement.

The changes to the Dow likely won't affect many investors because the index is weighted by price. Therefore, the low share value of Citi and GM mean they have held less sway in recent months. And Dow will adjust the formula by which the index is calculated so the addition of Travelers and Cisco won't affect the value of the average.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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