Earlier today, Apple (AAPL) shareholders received a bit of a good news when it was announced that the stock would be added to the Dow Jones industrial Average in place of AT&T (T).  The move has been a long time coming for many, as the stock is far and away the largest company in the world in terms of market cap, and became just a question of when after the company split its stock 7-1 last year.

With its high share price and the fact that the DJIA is a price weighted index, one would think that AAPL’s addition to the index would cause a big increase in the Technology sector’s weight in the index, but that will be partially offset by the fact that Visa (V) will be splitting its stock 4-1, so on a post-split basis that stock will see its weight decline to about 2.5%.  Therefore, once AAPL is added, the Technology sector will have a weight in the index of 17.11%, making it the second largest sector in the index.  With a weighting of 20%, Industrials will be the largest sector in the index (the index is called the industrial average afterall).  Other sectors that will have a weighting in excess of 10% are Financials (16.25%), Consumer Discretionary (15.43%), and Health Care (11.42%).

Although AAPL is the largest company in the world and has a market cap that is more than twice the nearest company, it will not have the largest weight in the index.  That title will go to Goldman Sachs (GS) which will take the spot after Visa’s split.  In fact, Apple will have just the fifth highest weighting in the index at 4.7% behind Goldman, 3M (MMM), IBM, and Boeing (BA).
New Dow

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