NEW YORK (PNN) - June 1, 2009 - In order to maintain the illusion that the economy is recovering, the Dow Jones Industrial list of 30 companies have replaced mainstays General Motors and Citigroup, Inc. with better performing companies. Of course, this skews the market results and diminishes their credibility as a barometer for the true state of the economy.

U.S. financial stocks rose in early trade Monday as markets focused on General Motors Corp. (GM) formally filing for bankruptcy and a shakeup in the financial-sector composition of the Dow Jones Industrial Average.

Travelers Cos. (TRV) replaced Citigroup Inc. (C) in the widely followed blue-chip index, while Cisco Systems Inc. (CSCO) took GM's (GM) spot, Dow Jones & Co. said Monday morning. Shares of Travelers were up 3% in recent action, while Citi shares were about even.

The Financial Select Sector SPDR Fund (XLF), a barometer of financial-services shares, climbed roughly 2%.

In other sector news, Prudential Financial Inc. (PRU) on Monday said it will not participate in the U.S. Treasury's Capital Purchase Program. The CPP is a voluntary program established under the Troubled Asset Relief Program in which the government buys preferred equity securities in financial institutions. In a separate announcement, Prudential Financial said it has commenced a public offering of $1.25 billion of its common stock.

SunTrust Banks Inc. (STI) said on Monday that it is selling $1.4 billion worth of its common stocks and starting a $1 billion buyback of preferred shares and hybrid securities.

Morgan Stanley (MS) and Citi said they have closed their previously announced wealth-management joint venture ahead of schedule. The new firm, Morgan Stanley Smith Barney, combines Morgan Stanley's Global Wealth Management Group with Citi's Smith Barney in the U.S., Quilter in the U.K., and Smith Barney Australia retail units into a new wealth management firm with 18,500 financial advisers and 1,000 brokerage locations globally, the banks said.

Bank of America Securities-Merrill Lynch Research, a unit of Bank of America Corp. (BAC), on Monday said it hired Ethan Harris as head of North America Economics and David Bianco as head of U.S. Equity Strategy. Harris joins from Barclays (BCS), previously Lehman Brothers, where he was the chief U.S. economist. Bianco was most recently chief U.S. equity portfolio strategist at UBS (UBS), according to a press release.

Ed. Note: Putting all the spin aside, the real reason for today's 200 point rise is that down-trending Citi has been removed from the list of indicators and Traveler's, which is performing better, put in its place. Look carefully. The DOW has reshuffled the roster of stocks used to calculate the index. In other words, they are cherry-picking which stocks they use to produce the best results. Today's DOW is being rigged to offset the effect of the GM bankruptcy, which closes 12 factories and lays off 20,000 autoworkers.