'It's extremely unusual, the amount of changes...this is a massive amount, especially when you add in Apple's, which re-weights it significantly,' S&P Dow Jones' Howard Silverblatt said of the adjustments to the Dow that were announced Monday.
The shake-up was prompted by Apple's decision to enact a 4-for-1 stock split, which would significantly reduce the benchmark's exposure to the technology sector.
"Basically, Apple — by itself — took the technology [weighting] within the Dow down from 27.6% to 20.3%. It's a significant decline," Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told CNBC. "By adding Salesforce, you can come back to 23.1% of the Dow being in technology." As a result of Apple's 4-for-1 stock split, its ranking is set to drop from the most heavily-weighted component all the way down to 16th. The 124-year-old blue-chip average is price-weighted, meaning stocks with higher share prices are given greater weight in the gauge.
Apple has soared more than 70% this year to become the first U.S. company to hit a $2 trillion market capitalization. The tech juggernaut has contributed more than 1,400 points to the Dow in 2020, by far the biggest influencer. Without Apple's heavy-lifting, many on Wall Street believe the Dow could have a harder time catching up with the S&P 500 and the Nasdaq Composite, which have already reclaimed their respective records.
Exxon has been a Dow component for nearly 100 years. It was first added as Standard Oil of New Jersey in 1928 when the benchmark expanded to 30 stocks from 12 stocks.The Dow has gained about 55% from its March 23 low, sitting 4% below its all-time high of 29,568.57 from Feb.12.This is breaking news. Please check back for updates.
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