(Bloomberg) – The planned stock split of Apple Inc. will ease its influence on the Dow Jones Industrial Index after the iPhone maker surged 100% since its low in March that nearly pulled the weighted measure back to an all-time high.
At current price of $ 452 per share, Apple has the largest share of the index with 11 percent. The 4-to-1 split will now lower its price tag to around $ 113 and bring its ranking in the Dow to 16th. Apple has risen almost 55% by 2020, adding more than 1,100 points to a bar. The stock has fallen about 2% during that time. The split is expected to go into effect August 31.
In a world where passive investing drives the stock market, a drop in the proportion of indices like the Dow Average has the potential to drive the outflow of money from money managers to mimic benchmark changes. . According to data from S&P Dow Jones Indices, approximately $ 31.5 billion has been indexed or benchmarked by the end of 2019.
Charles Day, UBS chief executive and private equity advisor with over $ 600 million in assets under management, said the stock split “is an attraction for retail.” “It will make a difference for the Dow.”
However, the split will not affect Apple’s No. 1 position in the S&P 500, an index calculated by market capitalization, rather than share price.
Apple jumped the most in the Dow this year as consumers were restricted from buying new iPhones, iPads, and Mac computers to stay connected during a pandemic. Even though any selling due to a change in weight may fade away from a company’s market value of $ 1.9 trillion, that’s not good news for a stock that has a high Relentless gains are causing a stir at a time when technology stocks lagged behind the market last month amid pricing concerns.
The Apple split is “reducing the theoretical demand from passive indexers,” said Julian Emanuel, director of equity & derivatives strategy at BTIG LLC, in a note. “Combined with the general loss of momentum in the Nasdaq 100, the AAPL could counter Newton’s Law of Gravitation in the coming weeks.”
(Update prices on second paragraph.)
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