Computer maker Hewlett-Packard Co. and aluminum firm Alcoa Inc. are also getting the boot. S&P Dow Jones Indices, which manages the average, cited the three companies’ low stock price and the desire to diversify in its announcement Tuesday.
Wall Street giant Goldman Sachs will replace the Charlotte bank. Visa Inc. and Nike Inc. will also be added.
Bank of America was notified of the change Tuesday morning, S&P Dow Jones Indices executives said. The bank was not immediately available to comment.
“The consensus is that it’s not going to make a big difference in their stock price,” said Don Olmstead, managing director of Novare Capital Management in Charlotte. He said very few insitutional investors look to line up their portfolios with the Dow index. Instead, they use a broader measure like the S&P 500, which tracks more stocks.
While there may be some loss of prestige in dropping from the most well-known index among Americans as a whole, Olmstead said there shouldn’t be any major difference in how frequently the stock is traded or how it performs.
“Bank of America is such a big company and widely held, so it wont have much of an impact long-term,” said Brian Rudisill, senior vice president at Novare Capital.
The decision ends a five-year run for the bank on the Dow. Bank of America was added in February 2008 in an effort to increase the representation of financial companies. At the time, the stock was trading at $42.14.
The financial crisis and its aftermath, as Bank of America found itself laden with legal liability primarily from its acquisition of subprime lender Countrywide Financial Corp., dramatically diminished the stock’s value. At one point in 2009, shares traded near $3.
In 2011, Bank of America was the worst performer in the Dow Jones Industrial Average, falling 58 percent. The next year, the bank was the best in the index -- up more than 108 percent.
Bank of America shares were up slightly in early morning trading, at $14.53.