The Dow Jones industrial average is swapping Bank of America for Goldman Sachs and also replacing Hewlett-Packard and Alcoa in a six-company shake up of the most widely known barometer of the U.S. stock market.
Residents in Charlotte are wondering what the announcement could mean for the bank and for the city.
"It does matter because the bank is one of the biggest employers in the city of Charlotte, so anything that happens to the bank has ramifications on the whole city," said Charlotte resident William Bellinger.
S&P Down Jones Indices says it will replace HP with Visa and Alcoa with sneaker-maker Nike in the first three-for-three change to the index since April 8, 2004. The changes will become effective at the start of trading Sept. 23.
S&P Dow Indices manages the average and says the changes won't disrupt the level of the index. It says a push to diversify the sector and industry group representation of the index helped prompt the changes.
The Dow is made up of 30 stocks. A small committee decides which companies are added or dropped.
"The index changes were prompted by the low stock price of the three companies slated for removal and the index committee's desire to diversify the sector and industry group representation of the index," said S&P Dow Jones Indices in a news release on Tuesday.
"The decision has no impact on our business or our strategy for providing solid returns to shareholders. In fact, Bank of America was the leading performer in the Dow Jones index in 2012,"said Bob Higgins, a financial analyst in Charlotte said the move reflects the Dow Jones wanting to bring in higher-priced stocks.
Bank of America's stock is trading close to $15 a share while the stocks replacing it are trading close to $130 a share.
"The fact is, the company had the best performance in 2012 of the companies in the Dow. But that doesn't change the fact that it's a low priced stock and the Dow is a price weighted index," Higgins said.
A man who analyzes the local economy said the move is more symbolic than seismic.
"It's a prestige slap, it's an ego slap. But for practicality, in terms of the day-to-day operations of the company, and profitability of the company, it doesn't mean a thing," said John Connaughton, an economist and professor with University of North Carolina at Charlotte.
Connaughton, who also owns stock in the bank, said people should be focusing more on the bank's business model and its bottom line than where it is on the stock exchange.
"What I'm going to say is what's the stock price doing today, and more importantly what does our third quarter profit look like? Because those are the things that are going to ultimately determine the value of B of A," Connaughton said.
Check back with WSOCTV.com for updates on this developing story.
What do you think about the Dow Jones changes? Tell us your thoughts on our Facebook page.