Tech magnate Apple Inc. will be added to the Dow Jones Industrial Average (DJIA) on March 19, resulting in the exit of telecom giant AT&T.
Apple, the largest company in the world in terms of market valuation and the makers of trendsetting gadgets, including iPhone and iPad, joins the 119-year-aged blue-chip index at a time when the index is hovering around an all-time high. The move won't impact too heavily on the index though.
Meanwhile, an exit-experienced AT&T has been held by the stock market barometer DJIA for as long as one hundred years. The telecom giant has been showed the door by the index manager S & P a few times in the past too.
For Apple, which earned a record-setting $18 billion net income in the last -quarter, it is a long-anticipated achievement. The company has a market value of $736 billion, and is a top choice in terms of stock performance.
The market-monster 'Apple stock' has provided an annualized total return, representing the price gains and dividend payments, of 36% over a decade. It is a popular and 'in demand' stock for both institutional and individual investors.
According to the Wall Street Journal, the gadget-guru is 'one of the most recognizable and respected consumer brands' in the world.
"Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure," said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.
The Dow components are decided by the index committee that consists of the editors of The Wall Street Journal (WSJ). The WSJ is published by Dow Jones & Co., a wholly-owned subsidiary of News Corp since 2007.
The replacement of AT&T by Apple is going to make the Dow more vulnerable to sharp moves. It, however, won't distort the price level of the stock index, according to USA Today.
Interestingly, the Dow's current tech stock-portfolio, including Cisco Systems, Intel, Microsoft and IBM, will include an Apple too.