NEW YORK: Apple Inc. finally will take its place as a member of the elite 30 stocks in the Dow Jones industrial average, starting after trading March 18.
The Cupertino, Calif., powerhouse will replace telecommunications firm AT&T Inc. on the roster, S&P Dow Jones Indices said Friday.
The rise of Apple to the 119 year-old Dow index, whose components change only infrequently, was perhaps as inevitable as such a selection can be.
After a breathtaking rise since the mid-2000s, Apple has established itself as perhaps the country’s most prominent corporation of any kind, a perception cemented by its becoming the most valuable public company ever in 2012.
Indeed, its inclusion among the country’s blue-chip companies was delayed only by the fact that its shares were so expensive they would have distorted the index. Apple’s 7-to-1 stock split brought its price closer to the median price of the Dow, allowing the technology giant to bump out AT&T, which is still formidable but much lower in value than it once was.
The replacement of AT&T with Apple is emblematic of how the Dow has managed to adapt to changes in markets and the economy, said Richard E. Sylla, a historian of financial institutions and markets at New York University’s Stern School of Business.
“AT&T, which was in the Dow for much of the 20th century, was how people used to make phone calls,” he said. “Now Apple is the way people make phone calls.”
For the Dow, Apple’s inclusion helps cement the rise of technology as a foundational component of the index, a process that began in 1999 when Microsoft Corp. and Intel Corp. joined the index. It marked the first time that the Dow included tech stocks that also were part of the Nasdaq Composite Index.
The addition of Microsoft and Intel pushed to the wayside former industrial giants Union Carbide & Carbon Corp. and Goodyear Tire & Rubber Co.
Today, about two-thirds of the Dow’s 30 components are still manufacturing companies. Apple’s inclusion will make it the sixth Dow component classified as an information technology company.
