Apple joins Dow index, AT&T out in reshuffle

NEW YORK — Apple is in. AT&T is out.

In another milestone for the popular and profitable iPhone giant, Apple will replace AT&T in the venerable Dow Jones industrial average on March 19, the manager of the index announced Friday.

The move isn’t likely to impact the 30-stock index much, and will have no effect on the fortunes of the two companies. But market experts say it does have symbolic importance, sort of like getting an Oscar at the Academy Awards — or at least a nomination.

The change cements Apple as “the gold standard of technology,” says Daniel Ives, a financial analyst at FBR Research. “They’ve really become the modern-day Wright Brothers.”

The reshuffling of the 119-year-old Dow, a barometer of market fortune and folly once dominated by railroads, also reflects a changed business world.

“It underscores that technology continues to be a critical driver of the overall economy,” says Edward Jones analyst Bill Kreher.

Apple is the world’s most valuable company. Its market value on the stock exchange, or what it would take to buy all its shares, closed last month above $700 billion, a first for any company.

Apple won’t get top billing in the Dow, though. Thanks to a quirk in the way the index is calculated, that honor will go to a company a little over a tenth as valuable: Goldman Sachs.

The Dow weights companies by how much it costs to buy a single share, not all of them. On Friday, a Goldman share fetched $186.91 versus $126.60 for Apple.

A look at the musical chairs at the world’s most famous index:

The reason

For all the symbolic importance, the trigger for the move is less colorful. The manager of the index, the S&P Dow Jones Indices, said it’s making the change in response to a planned stock split for Visa, another Dow member.

After its four-to-one split, Visa will wind up with a lower price. S&P said that would reduce the weight of the information technology sector in the Dow because Visa, a credit-card and payment-processing giant, counts as a tech stock. Adding Apple will help balance out this reduction.

Tweaking the index

S&P Dow Jones Indices said the decision to fold in Apple won’t alter the overall level of the index, which stood at 17,856 Friday.

S&P Dow Jones is casting the move as a sort of a housekeeping maneuver, a way to ensure that the index better reflects the US economy and markets.

The switch is not a reflection of its view of Apple.

“This doesn’t mean we like the stock, or don’t like the stock, or something like that,” says David Blitzer, chairman of the index committee at S&P Dow Jones.

Challenges at AT&T

While the Dow change wasn’t triggered by anything AT&T did, it comes at a challenging time for the phone giant.

The nation’s second-largest wireless carrier is facing pressure from smaller rivals T-Mobile and Sprint in a competitive environment in which most Americans already have a cellphone.