With Citi at $1 and others below $5, Dow's claim to lead is challenged.

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NEW YORK (MarketWatch) -- In a sign of the times, the relevance and composition of the Dow Jones Industrial Average (.DJI), the most popular window into Wall Street for retail investors, is increasingly being questioned now that five of its 30 "blue-chip" stocks trade below $10.

Only 15 Dow stocks have traded below that level over the past 39 years, according to Dow Jones Indexes. More shockingly, Citigroup Inc. (C), once the largest bank in the world, has now become the first blue-chip stock ever to slip below $1, according to Dow Jones data going back to 1970.

"I don't think Dow stocks should be on the dollar menu at McDonald's," said Barry Ritholtz, CEO and director of equity research at Fusion IQ.

Ironically, McDonald's Corp.'s (MCD) stock, currently trading at more than $50, is one of the four most influential stocks on the price-weighed Dow.

While investment professionals typically prefer to use the broad S&P 500 index (.SPX) as a benchmark, the Dow has long been viewed as the symbol of corporate and investment success in the public's mind.

That is until the ongoing banking crisis and economic recession, by some measures the biggest since the 1930s, cut in half the Dow's value from its all-time highs in Oct. 2007. In not even three months since the start of 2009, the Dow has lost nearly 25%, sending the benchmark and many of its components to 12-year lows.

At the very least, Dow stocks below $10 call into question the use of the term "blue chips" to describe them. The term refers to the highest-value chips used to play in casinos.

Besides Citigroup, Alcoa Inc. (AA), Bank of America Corp. (BAC), General Electric Co. (GE) and General Motors Corp. (GM) currently trade below $10. American Express Co. (AXP) briefly sank below that level last week, while Intel Corp. (INTC) and Pfizer Inc. (PFE) are only a few dollars above.

Three stocks -- Citi, GM, and Bank of America - currently trade below $5. Since 1970, the only other two Dow components ever to fall below the $5 level were Navistar (NAV) in 1991 and Bethlehem Steel in 1986, according to Dow Jones Indexes, which, like MarketWatch, is owned by News Corp. (NWS).

Navistar was removed from the Dow on May 6, 1991, three days after the last time it fell below $5. Bethlehem Steel stayed on the Dow and its shares eventually recovered. But it eventually got bumped in 1997, after its shares had slumped back below $10.

In this latest crisis, only AIG (AIG) has been removed from the Dow. It got booted in September of last year after the insurance company had to be bailed out by the U.S. government to prevent its collapse.

But some in the market believe further adjustments need to be made in the Dow's composition.

"It's not a good situation when the most widely quoted index in the world is in such a sad state," said Alec Young, market strategist at Standard & Poor's, owner of the rival S&P 500 index. "We are likely to see some changes, based on how pro-active [Dow Jones] was with AIG."

And calls are growing louder for the likes of GM and Citigroup -- both of which have received billions of dollars in government aid -- to be booted out of the blue-chip average.

The names of Internet giant Google Inc. (GOOG), networking firm Cisco (CSCO), or even investment company Goldman Sachs Group Inc. (GS), are being floated around as possible replacements.

"In today's economy, you have to have a little bit of Internet, and having Google, which has substantial [market capitalization] would make a lot more sense than GM and Citi," said Ritholtz of Fusion IQ.

Dow stocks, handpicked by the editors of the Wall Street Journal, are normally those of well-established companies that represent a leading industry. They tend to have stable earnings, little liabilities, and to pay dividends.

But even GE, the world's largest conglomerate, had to cut its dividend several weeks ago and then saw its credit rating cut by Standard & Poor's on Thursday.

More importantly, investors have been on a near death watch with Citibank and Bank of America, amid concern that the government might nationalize the banks and wipe out its shareholders.

Dow is doing its job

Dow Jones Indexes wouldn't officially comment on the likelihood of any specific changes. With three stocks kicked out of the Dow, 2008 was an unusually active year for the Wall Street Journal editors who pick the stocks that deserve to be part of the 30 blue-chip kingdom.

And for John Prestbo, editor of Dow Jones Indexes, the Dow is still doing its job.

"Does it make sense to have stocks that are below $10 on the Dow? No, absolutely not. But guess what? Things are different these days," Prestbo told MarketWatch.

"While we wouldn't pick stocks that trade under $10 to be in the Dow, [Citi and GM] are still representative of the industries that they're in, and their decline in the recent past is part of the story of the market recently."

While there are no perfectly defined standards for a stock to be booted out, the removal of AIG was entirely due to its nationalization, Prestbo explained.

"That like bankruptcy, put them in a totally different status and makes their stock ineligible," he said. "The same would apply to Citigroup."

The historic scale and scope of the market and economic downturn might explain why dollar-stocks could still be considered blue chips.

The New York Stock Exchange last month temporarily suspended until June its own rules that a stock be delisted if its shares trade below $1 for more than 30 consecutive days.