Apple (AAPL) Set to Takeover the Dow

With the close of trading today, March 18, as was previously announced, Apple (NASDAQ: AAPL) will be added to the venerable Dow Jones Industrial Average (DJIA), replacing AT&T (NYSE: T). The change will be effective with the opening of trading on Thursday, March 19. The addition has been a long-time coming and has been greeted with a mixed response on Wall Street.

Apple's addition to the Dow was partially driven by fellow-Dow component Visa's (NYSE: V) 4-for-1 stock split, which is scheduled to be effective at the same time. With Visa's split this reduces the weighting of the Information Technology sector in the index, allowing the addition of Apple.

Apple's own 7-for-1 stock last year was also a key contributor. Because the Dow is a price-weighed index, Apple's prior stock price of over $700/share made it impossible to add. The split brought Apple's stock price closer to the median price in the DJIA, officials from the Dow said.

In light of the news, some on Wall Street fear the addition to the Dow will be a bad omen for Apple, arguably the best performing stock over the last decade.

Following the news, analyst Trip Chowdhry of Global Equities Research said the news was "extremely bad for Apple" and urged executives at the company to refuse to join.

"Companies in Dow have historically symbolized companies which are boring, have zero innovation, complacent and are inching closer to irrelevance by the day....which is definitely not what Apple is all about," Chowdhry said.

But like it or not, Apple's addition to the world's most followed average is a big event. Now when mom-and-pop investors and market bystanders hear "... the Dow as up 200 points today" know that Apple will be setting the pace, both higher and lower.

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