Apple later this month will be added to the Dow Jones Industrial Average, replacing AT&T on the key stock market index in the first shake up since 2013.
“As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices in a statement.
Rumors had swirled for days that Apple (AAPL) would be added to the index, and the electronics gadgets maker has Visa to thank for the change. Visa’s (V) stock split lowered the adjusted price of Visa, which reduced the weighting of the information technology sector in the index. Adding Apple to the index would help partially offset this reduction, S&P Dow Jones Indices said. Apple’s stock split last June was also a factor, as it brought down the company’s stock price closer to the median price in the DJIA.
Shares of Apple were up slightly Friday, while AT&T shares were lower. AT&T had one of the lowest prices among DJIA constituents. AT&T was also bumped because the DJIA was determined to be over weighted in telecommunications, and AT&T has a smaller market capitalization than rival Verizon (VZ).
Apple will officially replace AT&T after the close of trading on March 18 and the change will be effective with the open of trading on March 19.
The last change to occur to the DJIA occurred in September 2013, when three new members were added: Goldman Sachs (GS) , Visa and Nike (NKE). They replaced Bank of America (BAC) , Alcoa (AA) and Hewlett-Packard (HPQ).
Apple earlier this year achieved another key milestone: it became the first U.S. company with a market value above $700 billion, which added to an already long list of achievements for the electronics titan.