Dow Jones Launches Economic Stimulus Index

According to a company announcement, the index measures the performance of leading U.S. companies drawn from industries that are expected to receive stimulus dollars from the American Recovery and Reinvestment Act of 2009. Dow Jones Indexes mapped the key areas targeted by the American Recovery and Reinvestment Act to six core categories: alternative energy, construction and materials, energy grid, environment, technology, and telecom/Internet.

To be eligible for inclusion, a company must be a component of the Dow Jones U.S. Total Stock Market Index, must have a three-month minimum average daily trading volume of $5 million, and must be categorized in one of the six categories determined by Dow Jones Indexes, the announcement said. Within each of the six categories, stocks are selected top-down based on float-adjusted market capitalization until the target component count per category is achieved.

The number of components is determined based on the percentage of stimulus dollars allocated to each category. Of the 50 index components, 20 are derived from the category construction and materials, 10 components from alternative energy, and five components from each of the remaining categories.

The top five index components by free-float market capitalization are Microsoft Corp. (category: technology), AT&T Inc. (category: telecom/Internet), General Electric Co. (category: alternative energy), International Business Machines Corp. (category: technology), and Cisco Systems Inc. (category: telecom/Internet).

As of May 26, 2009, the Dow Jones U.S. Economic Stimulus Index is up 1.62% since its inception on December 31, 2008.