TECH TAKES THE DAY : MEMBERSHIP IN EXCLUSIVE BLUE-CHIPS A MATTER OF PRESTIGE.

Byline: Eileen Alt Powell Associated Press 

Losing a spot on the Dow Jones industrial average may be more of a psychological setback than a substantive one, analysts and corporate officers said as four titans got their walking papers Tuesday.

``Maybe their egos were stepped on a little bit,'' said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. ``But I would hope no CEO worries about it one way or the other.''

Chevron Corp.; Goodyear Tire & Rubber Co.; Sears, Roebuck & Co., and Union Carbide Corp. all will be removed from the 30-stock indicator on Monday. Shares in all four fell Tuesday in heavy trading.

Companies removed from the list can take heart that their departures aren't necessarily forever: International Business Machines Corp., Coca-Cola Co., General Motors Corp., General Electric Co. and International Paper Co. are among companies once tossed out of the Dow that have made it back on.

Of course there are departures few remember these days, like some of the original Dow components in 1896 - American Cotton Oil, Distilling & Cattle Feeding and National Lead.

The newcomers are Home Depot Inc., Intel Corp., Microsoft Corp. and SBC Communications Inc. All were selected by The Wall Street Journal to join the Dow industrials, and their shares were mixed, with Home Depot and Microsoft both falling Tuesday.

The Dow is closely watched as a measure of U.S. stock market performance, even though it only tracks 30 stocks. Membership in the exclusive club of blue-chips is a matter of prestige.

Officials at Sears and Goodyear quickly expressed disappointment at losing their places and said they aren't about to be written off as relics.

At Sears, spokeswoman Peggy Palter termed the move ``misguided.''

``With more than $40 billion in revenues, 300,000 employees and relationships with 65 million households, Sears most certainly plays a relevant role in the U.S. economy,'' the nation's second-largest retailer said in a statement.

Goodyear considers itself a bellwether for such diverse industries as transportation, construction and mining.

``Today's changes in the Dow 30 illustrate a business climate that favors the technology and service industries,'' Goodyear's executive vice president, Robert W. Tieken, said in a statement.

The inclusion of Nasdaq-listed Intel and Microsoft marked the first time ever that companies were chosen for the Dow that are not listed on the New York Stock Exchange. The shake-up in the Dow, the first since another four-stock shift in 1997, also marked a heavier weighting in technology.

Intel and Microsoft, the most influential players in personal computers, welcomed their admission to the Dow club, with Microsoft spokeswoman Caroline Boren terming it ``a recognition of the value and positive impact that technology companies . . . have had on the nation's economy.''

Some analysts saw this as a victory of sorts for Nasdaq, the upstart market where these and other high-tech stocks trade.

But William Meehan, chief market analyst for Cantor Fitzgerald in Darien, Conn., said investors ``realize that Intel and Microsoft aren't tiny companies that trade on the Nasdaq because they don't qualify for listing on the New York Stock Exchange.''

Meehan said that some of the heavy activity in the stocks Tuesday reflected traders rearranging portfolios before next week when investments tied directly to the Dow will have to reflect the new makeup of the average.

These include some $160 million in mutual funds that hold the same stocks as are included in the Dow industrials and ``diamond'' unit trusts traded on the American Stock Exchange.

Meehan and others suggested that the Dow's keepers could have considered removing at least one other stock in its last change this century - Phillip Morris Cos. Inc. The $74 billion food, beer and tobacco conglomerate, which is the world's largest cigarette maker, already has agreed to multibillion-dollar settlements of smoking-related lawsuits with the states and faces potentially huge judgments in pending cases brought by smokers.