Apple Joins Dow Jones Industrial Average, Kicks AT&T To The Curb

As we head into the weekend and bid farewell to another work week, Dow Jones on Friday announced that it's adding Apple to the Dow Jones Industrial Average, which will go into effect after the close of trading on Wednesday, March 18. The change will be effective with the opening of trading on the following morning, Thursday, March 19.

A big reason for the change is Visa's scheduled 4:1 stock split, which will be effective at the same time. According to Dow Jones, the ensuing lower price of Visa will reduce the weighting of the Information Technology sector. In order to balance this out and "partially offset" the reduction, Apple is being added.

Apple Store

"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," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "The DJIA is price weighted so extremely high stock prices tend to distort the index while very low stock prices have little impact. The timing of Apple's addition to the DJIA hinged on two stock splits: Apple's 7:1 last June and Visa's 4:1 on March 19th this year."

There's just one bit of housekeeping that comes from adding a company to the DJIA, and that's to remove another -- it's capped at 30 firms. Dow Jones has chosen to give AT&T the boot. AT&T, which had been a member since 1999, was previously a good fit because it had one of the lowest stock prices and Dow Jones says it's over-weighted in telecommunications. However, Verizon is also part of the DJIA and the two are "quite similar," except Verizon has a higher market capitalization compared to AT&T.

Apple recently had its best fiscal quarter ever, with $18 billion in profit on revenue of $74.6 billion.

Via:  PR Newswire
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