Apple stock to replace AT&T in Dow Jones Industrial Average
Apple will be added to the Dow Jones Industrial Average later this month, a new major distinction on Wall Street for the world's most valuable company.
Apple will replace AT&T on the Dow, according to the S&P Dow Jones Indices, which owns the DJIA. The change will take place at the close of trading on Wednesday, March 18, and will be effective at the opening of trading on Thursday, March 19.
The change was prompted by a 4-for-1 stock split by Visa, which is scheduled to be effective at the same time. The post-split price of Visa will reduce the weighting of the Information Technology sector in the index.
According to the S&P Dow Jones Indices, adding Apple will help to partially offset the reduction caused by Visa.
"In price weighted indices such as the DJIA, a large change in price of a high priced stock can have a material impact on sector representation in the index and this index change is designed to minimize that impact," the organization said.
Also playing a part was Apple's own 7-for-1 stock split, which took place in June of last year and helped to make room for Apple.
As for AT&T, the communications company has one of the lowest prices among current DJIA constituents. In addition, it was said that the DJIA is overweighted in telecommunications with both AT&T and Verizon as part of the index.
"As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
Shares of Apple have been trading at all-time-high levels in recent weeks, and the iPhone maker is by far the most valuable company on the market. With a market capitalization level of $736 billion as of morning trading on Friday, Apple is worth more than twice that of the Exxon Mobil Corporation's $364 billion market cap.
Apple will replace AT&T on the Dow, according to the S&P Dow Jones Indices, which owns the DJIA. The change will take place at the close of trading on Wednesday, March 18, and will be effective at the opening of trading on Thursday, March 19.
The change was prompted by a 4-for-1 stock split by Visa, which is scheduled to be effective at the same time. The post-split price of Visa will reduce the weighting of the Information Technology sector in the index.
According to the S&P Dow Jones Indices, adding Apple will help to partially offset the reduction caused by Visa.
"In price weighted indices such as the DJIA, a large change in price of a high priced stock can have a material impact on sector representation in the index and this index change is designed to minimize that impact," the organization said.
Also playing a part was Apple's own 7-for-1 stock split, which took place in June of last year and helped to make room for Apple.
As for AT&T, the communications company has one of the lowest prices among current DJIA constituents. In addition, it was said that the DJIA is overweighted in telecommunications with both AT&T and Verizon as part of the index.
"As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
Shares of Apple have been trading at all-time-high levels in recent weeks, and the iPhone maker is by far the most valuable company on the market. With a market capitalization level of $736 billion as of morning trading on Friday, Apple is worth more than twice that of the Exxon Mobil Corporation's $364 billion market cap.
Comments
Apple’s influence on the U.S. economy has been ignored for years. Apparently no more.
I wonder if this will lessen the need for analysts to try and denigrate the stock now that big swings on Apple will have an effect on the Dow as a whole.
I'm no expert, but there are funds that are based on these composite indexes. Could mean AAPL gains more investors, for one. Second, AAPL's volatility may lessen as it becomes more widely held. This seems to me to be a very odd move by Dow Jones and it will be interesting to see how AAPL actually does influence the index. Perhaps a little more volatility is what they need since their composite growth versus Apple's growth has been dismal.
Are there any other indexes that currently include Apple?
Thanks
Can some of the experts here explain the ramifications for in general AAPL if this is true please.
None at all, except for a short term bump associated with many Dow-benchmarked mutual funds reshuffling their portfolios to sell ATT and buy Apple.
If anything, it could even be a slight negative, since pretty much every firm in the Dow is a dowdy, old, mature cash flow, slow-growth business.
About time. As others have said, this might lessen the bullshit trading that some brokers do in Apple stock, since it will influence the whole market more now.
Are there any other indexes that currently include Apple?
NASDAQ 100; S&P 500. Now Dow. So it's in all three major indexes, as it perhaps should be.
You wrote just what I was going to say!
This is a good move for Apple, I hope. I presume it will mean more stability for the stock. And yes, many indexes track the Dow, so Apple will be bought and held much more.
Fantastic!
If there's any sanity left in this world, we'll see $130 or better by the end of trading.
I'm curious why you've chosen to daytade AAPL rather than buy and hold? I daresay the day I choose to cash out I'll be in a far better position than the one you'll find yourself in, what with the higher taxes you'll pay, plus the massive chunks of capital you need to commit to realize a decent gain within a brief trading window.
There is certainly some prestige associated with being a DJIA component, but no serious investor cares about the DOW, and while there are funds that track it, those are trivially small relative to funds that track real market-weighted indices.
Thanks to its market cap, AAPL is already represented very strongly in the indices that matter, such as the S&P 500.
So I wouldn't expect this to have much of an impact on AAPL's stock price. I work for a company that was added to the DOW some time ago, and our stock hasn't moved much since.
Almost nothing, hopefully. Over the years, companies in the DOW haven't performed as well as those that aren't, in the same categories, but not by much.le has gotten a lift today, but I don't think it means much, and part is likely from the low unemployment number of 5.5%.
Congrats to Dow Jones Industrial Average!!
On similar note, has google joined there too ... or still busy selling illegal viagra?!!
Nobody. The DOW is an almost useless index. It means nothing. There are some DOW tracking funds for those who do believe it means something. But the idea of just using stock price is nuts.
According to Google, the current rate of unemployment is 8.2%.
Link here: http://www.bls.gov/cps/cps_htgm.htm
...and most people are aware of how the government undercounts as they do not include those long-term unemployed, nor those who have dropped out the ranks of those seeking employment.
Some estimates of "actual" unemployment are as high as 23.2%.
Source: http://www.shadowstats.com/alternate_data/unemployment-charts