Dow index adds Bank of America, Chevron

By Herbert Lash

NEW YORK (Reuters) - The Dow Jones industrial average .DJI is adding Bank of America Corp (BAC.N) and Chevron Corp (CVX.N), the first change to the blue-chip stock index in almost four years, Dow Jones & Co said on Monday.

Altria Group Inc (MO.N) and Honeywell International Inc (HON.N) will be dropped from the 30-member index, the oldest and single most-watched gauge of stock performance in the world. The changes take effect on February 19, Dow Jones said.

The planned spin-off of Philip Morris International Inc from Altria, which will leave it a purely domestic tobacco company, prompted the change in the Dow's make-up, said Marcus Brauchli, managing editor of The Wall Street Journal.

The Dow's composition is determined by editors of the Journal, which is published by Dow Jones, a unit of News Corp NWSa.N.

The change is the first in the 111-year-old index since April 2004, when three stocks were replaced.

The addition of Chevron makes sense because the Dow was light on energy at 5 percent compared with the broader Standard & Poor's 500 Index at 12.5 percent, said Chris Orndorff, who helps oversee $50 billion in assets as managing principal at Payden & Rygel Investment Management in Los Angeles.

Similarly, the addition of Bank of America makes sense because the Dow was underweight financials at 10 percent, versus 18 percent for the S&P 500, Orndorff said.

"With respect to the fundamentals, there is not going to be a dramatic change," he said. "So I don't see the DJIA suddenly outperforming the S&P 500 because of the changes."