Just when you think the fluctuations on the venerable Dow Jones index can get no worse, technology giants Intel and Microsoft are added to the elite 30 stocks which make up the index.

The changes, the first since March 1997, will almost certainly increase the Dow's volatility given the wide swings which regularly occur in the fortunes of technology stocks. But it is not before time. Their inclusion, together with that of telecoms group SBC Communications and rapidly-growing retailer Home Depot, leaves the index more accurately reflecting the US economy.

Those losing out in the index, which is still top-heavy in manufacturing groups despite the economic dominance of the services sector, are Chevron Oil, Goodyear Tire and Rubber, retailer Sears Roebuck and chemicals combine Union Carbide. While the changes recognise the advent of new industries and the declining influence of more traditional businesses in the economy, the fact that the Dow is still calculated on the basis of share price rather than market capitalisation continues to present a distorted picture.

Also, adding outperformers like Microsoft and Intel to the Dow will only help to accentuate the misconception of a bull market for all, helping the index to rise further, while two-thirds of the broader based Standard & Poor's constituents have fallen this year.

Dominic Coyle can be contacted by e-mail at dcoyle@irish-times.ie