In a move that many felt was a long time coming, Joseph Weisenthal of Bloomberg is reporting that Apple is poised to replace AT&T in the Dow Jones Industrial Average.
*APPLE TO REPLACE AT&T IN DJIA
— Joseph Weisenthal (@TheStalwart) March 6, 2015
The change is expected to go into effect at the beginning of the trading day on Thursday, March 19.
In a press release on the upcoming DJIA shuffle, David Blitzer explained the rationale behind the move was somewhat prompted by a recent Visa 4-1 stock split. Also helping matters is that Apple’s stock price is now much lower following the company’s 7-1 stock split last June.
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,
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. Apple’s split brought the stock price down closer to the median price in the DJIA. The Visa split will reduce the technology weight in the DJIA and make room for Apple. Among the current DJIA constituents, AT&T has one of the lowest prices. Moreover, the DJIA is over-weighted in telecommunications and AT&T and Verizon are quite similar, though AT&T has a smaller market capitalization.