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Quick Hits: Kraft Singled Out for DJIA


Brief scrutiny of today's headlines.

Kraft Foods (KFT) will replace American International Group (AIG) in the benchmark Dow Jones Industrial Average at the start of trading on Monday, September 22.

AIG will be cut from the index after the company received an emergency $85 billion bailout from the Federal Reserve. AIG's shares have lost about 80% of their value this week and have dragged down the Dow.

In a prepared statement, Robert Thompson, managing editor of the Wall Street Journal, said another financial company won't be added to the 30-stock index because current conditions are "extremely unsettled."

Kraft, the nation's second-largest food maker, was chosen because there are no other food makers in the DJIA.

There are no set criteria for stocks selected for the DJIA, but in general, the companies must be established US enterprises and a leader in their sector. Composition of the 112-year-old index was last changed in February when two stocks were replaced.

Warren Buffet's Berkshire Hathaway (BRK-A) is a major shareholder in Kraft.

The Dow Jones Industrial Average is the world's best known index and the most widely reported. However, individual investors might want to track the broader S&P 500 and the Russell indexes.
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