Why Apple joining the Dow Jones is a big deal

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Tim Cook has pushed the green agenda during his time as Apple CEO.
Tim Cook has led Apple to new heights. Photo: Bloomberg

On March 19, the world’s most valuable company will join the world’s top stock index.

In a feat of great irony, Apple is replacing none other than AT&T on the Dow Jones Industrial Average this month. And even if you don’t care about the stock market, for Apple it’s a big deal.

While already the most valuable company in the world by a long shot, joining the Dow cements Apple as a blue-chip stock and household name in the eyes of Wall Street. Basically, it signifies that Apple is here to stay as a global economic force.

“Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones, in a statement. A stock “typically is added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”

The 30 companies listed on the Dow are the big boys, like Disney and Coca-Cola. Overall, they represent the American economy. The only consumer technology company on the Dow that’s even close to Apple’s size is Microsoft.

The addition makes sense given Apple’s astonishing size, but its stock was too expensive to join the index until it split last June. It was rumored that Apple would join the Dow shortly after the 7-to-1 split, and now it’s finally official.

That the Dow chose to remove AT&T to add Apple is especially historic given the two’s history together. AT&T was the carrier that took a gamble on selling the original iPhone, the device that drives the lion’s share of Apple’s profits and made it the richest company on earth.

“Apple joining the Dow is noteworthy since the index committee has historically been very cautious about adding technology firms to the index,” said Neil Cybart, an independent analyst who follows Apple closely at Above Avalon. “Many market observers were anticipating this move as it was becoming very difficult to ignore the elephant in the room.”