In a landmark move, Apple will replace US telecom giant on the Dow Jones index on March 19, as the US stock market barometer looks to reflect the changing digital landscape.
AT&T first joined the US stock market barometer in 1916.
Despite being one of the most successful US firms, Apple was excluded from the Dow because its high stock price would have distorted the price-weighted index.
But a change in the structure of Visa shares, which is in the same sector, has made room for the iPhone maker.
From 18 March, Visa shares will be split four-for-one, which reduces the weighting of the information technology sector in the overall index.
David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said the timing of Apple’s addition to the price-weighted Dow Jones Industrial Average hinged on two stock splits: Apple’s 7:1 in June 2014 and Visa’s upcoming 4:1 on March 19.
“Apple’s split brought the stock price down closer to the median price in the DJIA,” Blitzer said. “The Visa split will reduce the technology weight in the DJIA and make room for Apple. Among the current DJIA constituents, AT&T has one of the lowest prices.”
The statement said that with AT&T’s departure, telecom will be represented in the Dow Jones industrial average by Verizon Communications.
The Wall Street Journal reports that Apple’s addition “caps the ascendancy of tech in the Dow that started in 1999 when software giant Microsoft Corp. and semiconductor maker Intel Corp. joined, a nod to the ‘New Economy’ boom then sweeping the U.S.”
All three companies are listed on the Nasdaq.
The Dow Jones Industrial Average is calculated by taking the sum of the share prices of its 30 stocks and dividing the total by a number known as the Dow Divisor.
The divisor is continually adjusted to accommodate structural changes to companies and to maintain continuity.