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Apple’s 4-for-1 stock split has propelled $AAPL, the S&P 500 and NASDAQ to record highs it has also prompted major changes in the Dow Jones Industrial Average. Salesforce.com will replace Exxon Mobil, Amgen will replace Pfizer and Honeywell International will replace Raytheon Technologies.

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S&P Dow Jones Indices on Monday announced three new companies will be joining the 30-stock benchmark Dow Jones Industrial index .

  • Salesforce.com will replace Exxon Mobil,
  • Amgen will replace Pfizer After Hours;
  • Honeywell International will replace Raytheon Technologies.

The changes will go into effect before the market opens on Monday, August 31.

The shake-up was prompted by Apple’s decision to enact a 4-fo-1 stock split. After the S&P 500 and the Nasdaq Composite hit record highs in the past weeks the Dow Jones Industrial Average has lagged.

US Indices W 8 21 2020

In 2019 the DJIA rose 22.3% in 2019 and iPhone maker Apple (AAPL) stood out from the crowd. Since the Covid lockdown and stimulus Apple has surged higher in an incredible run higher in 2019 Microsoft (MSFT), JPMorgan Chase (JPM), Visa (V) and United Technologies (UTX) round outed the top five. Apple shares closed up 86.2% in 2019. Microsoft shares surged 55.3% in 2019. JPMorgan Chase shares jumped 42.8% in 2019. Visa was up 42.4% this year. United Technologies shares were up 40.6% in 2019.

 The Apple Affect

After Apple’s 4-for-1 stock split, its ranking will drop from the most heavily-weighted component of the DJIA  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 by itself  took the technology [weighting] within the Dow down from 27.6% to 20.3% in a significant decline in the post Covid-19 technology world.

Salesforce brings technology back to 23.1% of the Dow being in technology. In 2020 Apple has soared more than 70% this year to become the first U.S. company to hit a $2 trillion market capitalization.  AAPL has contributed more than 1,400 points to the Dow in 2020, by far the biggest influencer.

The changes also show the changing picture of the market. The moves  help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy,” S&P Dow Jones Indices said in a statement.

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. For Honeywell, it marks a return to the Dow, after it was removed in February 2008. 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.

Stock reaction in the post market after the Dow announcements.

  • Salesforce.com will replace 215.20▲ 6.74 (3.23%) Exxon Mobil, 41.25▼ 0.97 (-2.30%) After Hours
  • Amgen 245.00▲ 9.43 (4.00%)After Hours will replace Pfizer 38.35▼ 0.49 (-1.26%)
  • Honeywell International 165.50▲ 6.13 (3.85%)After Hours will replace Raytheon Technologies 60.05▼ 1.83 (-2.96%)After Hours .

From The TradersCommunity News Desk

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