Apple Joining Dow Industrials, Replacing AT&T

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Customers gather for the opening of an Apple Store in Hangzhou, Zhejiang province, January 24, 2015. Reuters

NEW YORK (Reuters) - Apple Inc., the largest U.S. company by market value, will join the Dow Jones Industrial Average on March 18, replacing AT&T Inc., S&P Dow Jones Indices said on Friday.

With a market capitalization of about $736 billion, Apple is the largest publicly traded company in the world. AT&T, by contrast, has a market value of $176.5 billion.

The iPhone and iPad maker had been notable by its absence in the 30-stock average, and it had been excluded because its stock price was too high for the price-weighted index. The move by S&P Dow Jones Indices had been widely anticipated since a seven-for-one stock split in June 2014.

"This is a sign of the times, and it might get everyone to look at the Dow more than they have been," said Richard Sichel, who oversees $2 billion as chief investment officer at Philadelphia Trust Co.

"It would be difficult to pick any 30 companies that would cover the entire economy, especially compared with the S&P 500, but it does give the Dow more credibility."

In premarket activity, shares of Apple were higher, gaining 1.4 percent to $128.15, while AT&T's shares fell 1.4 percent to $33.53.

Since its split, had Apple been substituted for 29 of the 30 Dow components last June, the index would have been higher. Visa is the only Dow component that would have helped the Dow more during that time, in part because of its high stock price.

S&P Dow Jones Indices said that Visa's impending four-for-one stock split will reduce its weighting in the Dow. Despite Apple's size, it would currently only have a 4.66 percent weighting in the Dow because of its price, the index company said in a statement.

AT&T has had two stints in the Dow. It was added in 1916 and removed in 2004. After SBC Communications renamed itself AT&T following a 2005 merger, it was reinstated in the index.