McDonald's Corp., the company that gave the world the Big Mac and the Egg McMuffin, yesterday planted its golden arches in the heart of Wall Street by joining the prestigious Dow Jones industrial average.
With a nod to the growing importance of service companies in the American economy, editors at The Wall Street Journal, which is owned by Dow Jones & Co., chose McDonald's as the newest member of the closely watched 30-stock index.
McDonald's will replace American Brands Inc., the fourth-largest U.S. cigarette producer, which lost its spot when the editors decided that the index was overweight in the tobacco and packaged-food sectors.
The overweighting took place when the editors also decided yesterday to admit Philip Morris Cos. to the Dow Jones list. Philip Morris was added because of its recent acquisition of General Foods Corp., which long had been a member of the blue-chip index. The $5.6 billion acquisition of General Foods is to be completed soon.
General Foods makes Jell-O brand gelatin, Maxwell House coffee and other widely known brands. Philip Morris makes Marlboro cigarettes, Miller Beer and Seven-Up.
The Dow Jones industrial average is considered by the nation's investment community to be the bellwether indicator of market direction. When an investor asks a broker, "How's the market doing?" and the broker replies, "We're up 3 points," it is generally the Dow Jones industrial average that is being quoted.
The 30 companies included in the average are listed on the New York Stock Exchange. Dow Jones statistics also include a 20-stock transporation average and a 15-stock utility average.
First developed in the late 1800s, the Dow Jones industrial average retains it "smokestack" aura with U.S. Steel Corp., Union Carbide Corp. and Goodyear Tire & Rubber Co. But it also counts service-sector companies, including American Express Co., Merck & Co. Inc. and F. W. Woolworth Co.