Standard & Poors Corp. in New York is dropping the seven non-American companies from its S&P 500 Index and replacing them with U.S. companies that include Principal Financial Group, Des Moines, Iowa, and Prudential Financial, Newark, N.J.
Principal Financial (PFG), stock closed at $28.34 on July 10, up $1.34 and Prudential Financial (PRU) closed at $30.59, up 28 cents.
The move is expected to produce some buying power for the Index that has hit lows in October 2001 and again at press time. At press time on July 11, the S&P 500 had slid to $910.55.
What Your Peers Are Reading
S&P says the revision was made to make the Index “more consistent with its role as an index of large cap U.S. stocks and the U. S. segment of the S&P Global 1200 Index.
“The seven non-U.S. companies currently in the S&P 500 will be removed from the Index because they are not U.S. companies and, therefore, do not meet the current criteria for selecting these companies.”
Five of the companies that were removed from the Index are Canadian and two based in the Netherlands.
They are Alcan Aluminum; Inco; Royal Dutch; Unilever; Nortel Networks; Placer Dome; and Barrick Gold. Royal Dutch and Unilever are based in the Netherlands.
In addition to Principal Financial and Prudential Financial, the companies being added are United Parcel Service, Goldman Sachs, eBay, SunGard Data Systems and Electronic Arts.
Bear Stearns, New York, is continuing to rate the Principal “attractive” and Prudential “neutral.”