Kraft replaces AIG in Dow Jones industrial average

NEW YORK — Dow Jones & Co. said today that Kraft Foods will replace struggling insurer American International Group (AIG) in the Dow Jones industrial average (DJIA) when trading begins Sept. 22.

In a statement, Robert Thomson, managing editor of The Wall Street Journal, said another financial company is not being added to the 30-stock index because of "extremely unsettled conditions." Kraft was chosen because there is no food maker in the DJIA, said Thomson, who oversees the makeup of the widely watched index.

AIG is being removed as the company's poor health prompted the Federal Reserve to provide an $85 billion emergency bailout loan. Shares of the company have plunged 83 percent over just the last three sessions as AIG faces a liquidity crunch amid the continued downturn in the credit markets. AIG's freefall has dragged the DJIA down sharply.

Stocks added to the DJIA index have no set predetermined criteria but must be established U.S. companies that are considered leaders in their industries.

The 112-year-old index was last changed in February when two of the 30 stocks were replaced.

With two hours of trading left today, shares of Kraft rose 85 cents, or 2.6 percent, to $33.50.