Who stacked the deck to get Apple Inc. (NASDAQ:AAPL) into the Dow 30? There are not many who are not trading in Apple Inc. (NASDAQ:AAPL) and those who are trading elsewhere are moving into Apple Inc. CNBC’s Dominic Chu quotes his conversation with David M. Blitzer, the Managing Director of the S&P Dow Jones Indices regarding Apple Inc. joining ranks with them. Chu also discussed with the panel on CNBC as to why AT&T Inc. (NYSE:T) and not Verizon Communications Inc. (NYSE:VZ) was asked to leave the Dow Jones Industrial Average.
“It was a tough decision and one of the big concerns that they had. Given the size of Verizon and given the size of AT&T they felt as though they could have Verizon in there and not be too overweight telecom with getting Apple. […]. AT&T is just a slightly smaller company than Verizon. Verizon can still be there. It can still be there. It has a higher weighting because of its share price. And it would still maintain that telecom presence without overwhelming it with AT&T as well,” Chu quoted Blitzer as saying.
There are some traders, however, who believe the real catalyst that brought Apple Inc. in was Visa Inc (NYSE:V)’s four-for-one split. The Dow is looking at Apple Inc. to rescue the Dow 30 thinking Apple Inc.’s huge portfolio will fill up Visa Inc (NYSE:V)’s gap.
“When VISA goes four-for-one, it goes from a near 10% weighting in the Dow and it goes to about 2.5%. […]. They were going to out somebody else there that was going to bring up technology back up to where it is now. They do it with Apple and it gets them to a technology weighting that’s pretty much just where it was before Apple or before VISA split,” said Chu.
For AT&T Inc. (NYSE:T), the competition was not with Apple Inc. but with Verizon Communications Inc. (NYSE:VZ). It is definitely a concern for AT&T Inc. (NYSE:T) investors and traders who have perceived their investment in AT&T Inc. as a secure investment. The Dow Jones preferred Verizon Communications Inc. (NYSE:VZ)’s size and growth opportunity over AT&T Inc.’s reputation as being reliable for its investors. A birds-eye view of the index says it could have even been International Business Machines Corp. (NYSE:IBM) or 3M Co (NYSE:MMM), but it was AT&T Inc.’s bad day.
On the Dow’s side, they are looking to benefit a lot from the bullish behavior of Apple Inc. (NASDAQ:AAPL) stock, but according to some analysts Apple Inc. may not be able to gain a return benefit from the same bargain. While there are not too many people left who have not invested in Apple Inc., some experts argue Apple Inc. (NASDAQ:AAPL) may not be that tree that will grow to the sky.
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