Apple, the largest U.S. company by market value, is replacing AT&T in the Dow Jones Industrial average. It's a change that, some say, gives the Dow more credibility. Bobbi Rebell reports.
The Dow getting a taste for Apple. The largest U.S. company by market value will join the 30-stock index- replacing AT&T. David Blitzer is Chairman of the Index Committee at S&P Dow Jones Indices: SOUNDBITE: DAVID BLITZER, CHAIRMAN, THE INDEX COMMITTEE, S&P DOW JONES INDICES (ENGLISH) SAYING: "Apple is number one in size, probably one of the best known tech companies in the world. One that is well known for new products and rolls out new products at a frequent pace, and is everybody's idea of an up and coming tech company. It clearly belongs in an index like the Dow. No question about it." But because the Dow is a weighted index, Blitzer said S&P Dow Jones had to wait until after Apple's stock split that lowered its price per share. SOUNDBITE: DAVID BLITZER, CHAIRMAN OF THE INDEX COMMITTEE, S&P DOW JONES INDICES (ENGLISH) SAYING: "It would have been far and away the largest stock in the index. Had it gone up a little bit, the Dow would have appeared to pop up. Had it gone down a little bit, the Dow would have appeared to crumble. One stock shouldn't do that. It should be a combination of at least most if not all of the 30 stocks in the index that makes a move. At $700 a share, it would have been very distortionary." But some worry getting into the more than a century old index could be a sign Apple's peak season may be upon us. Reuters' BreakingViews Rob Cyran: SOUNDBITE: ROB CYRAN, COLUMNIST, REUTERS BREAKINGVIEWS (ENGLISH) SAYING: "Historically, the index has a problem because it tends to add companies right at the top. That's because it captures the popular zeitgeist. In 1999, for instance, everyone was talking about tech. The index added Microsoft. Everyone is talking about Apple right now. Could it be the top? Perhaps." A bit of irony in the choice to oust AT&T. It was Apple's partner as the exclusive carrier for the launch of the iPhone back in 2007. Since the iPhone's introduction, Apple's annual revenue has risen more than sevenfold. AT&T has not seen the same kind of growth. Apple will join the Dow after the close of trading on March 18th.