The Markets June 1, 2009

Mass. City Teachers’ Agreement Includes 403(b) Match Cut

Newburyport (Massachusetts) School Committee member George Moker said teachers have agreed to give back on several items in order to achieve an agreement in tough economic times.
Reported by

In the three-year contract that will take effect September 1, teachers agreed to give up matching contributions to their 403(b) retirement accounts, according to The Daily News of Newburyport. Teacher steps, a program which enables teachers to earn more in salary for completing graduate coursework and advanced degrees, has also been reduced by 75% the first year and 50% the second year.

The contract provides that teachers will receive a 2% raise the first year and 2.75% raises the last two years, according to committee Chairman Anne Donahue, the news report said.

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The Markets June 1, 2009

Citi, GM Lose Spots on Dow

Two mainstays of American business upended by the economic downturn are now losing their coveted spot in the Dow Jones Industrial Average, according to a Dow Jones&Company announcement.
Reported by

Dow Jones said The Travelers Companies, Inc. (TRV), is taking the place of Citigroup, Inc. (C), and Cisco Systems, Inc. (CSCO), is being substituted for General Motors Corp. (GM), as of the opening of trading on June 8.

“The parlous state of GM has left us with no choice but to remove it from The Dow. A bankruptcy filing immediately disqualifies a stock regardless of a company’s history or its role as a cultural icon,” said Robert Thomson, managing editor of The Wall Street Journal and editor-in-chief for all of Dow Jones, in the announcement. “We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring, which will see the government with a large and ongoing stake. We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion—Citigroup is a renowned institution, not only in this country, but around the world.”

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Thomson oversees the makeup of the index, which Charles H. Dow created as a 12-stock index in May 1896.

Selecting Travelers, Cisco

“The selection of Travelers, a property and casualty insurance company, is intended to restore the financials industry to full representation in The Dow,” Thomson said. “When we removed American International Group, Inc. last fall, we substituted Kraft Foods, Inc., rather than another financial stock because the financials industry was then in great upheaval. That choice left financials underrepresented in The Dow, a deficiency we are now correcting.”

Thomson said that Cisco is a fitting addition “because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age— just as automobiles were essential to America in the 20th century.”

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