Travelers down after joining Dow Jones Industrials

June 19, 10:11 AMInsurance Industry ExaminerDanny Workman

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Back on June 8, The Travelers Companies (TRV on NYSE) became a core holding in the Dow Jones Industrial index, Wall Street’s best-known market indicator.

Travelers was added at the same time that Citibank was removed. Beleaguered insurance giant AIG had been taken out last year. No doubt Travelers was chosen to give the basket of stocks comprising the Dow Jones Industrials greater representation from the financial sector.

Generating some $25 billion in sales last year, Travelers is one of America’s largest business insurers and also provides personal auto and home insurance to individual consumers.

Recent Stock Performance Report Card
When the announcement of joining the Dow Jones Industrials was made back on June 1, Travelers’ stock price bumped up 3.1% to close at $41.91. Share volume surged 60.4% to 9.6 million.

A week later when Travelers officially joined the index, TRV closed up 8% from its pre-announcement price at $43.92. However, the volume of Travelers stocks sold had spiked the prior Friday at 28 million shares. On June 8, TRV’s volume had slipped 71.5% to the 8 million level.

TRV ended yesterday at $42.53 which is 3.2% below its June 8 finish. Its volume of traded shares has also slipped by 38% since Travelers’ promising start as a Dow Jones Industrial Index member. Recently, the number of Traveler stocks sold per day is less than the daily volume in late May.

Also yesterday, the daily volume for the Dow Jones Industrial average was up 15.9% from June 8. The average itself is roughly at the same levels in the latter part of May.

Did Joining the Index Weigh Down Travelers?
After a promising start, Travelers is now somewhat of a lagging component for the Dow Jones Industrial average.

Investors may be viewing Travelers as more of a representative for the still-recovering American financial sector than as a property and casualty insurance superstar.