(Bloomberg) – The planned stock split from Apple Inc. will reduce its impact on the Dow Jones industrial average after the iPhone maker’s 100% rise since March has nearly dragged the price-weighted measure back to a halt.
At its current price of $ 452 per share, Apple has the largest weight in the index at 11%. A split of 4 to 1 would now drop its price tag to around $ 113 and send its ranking in the Dow Average to 16th. Apple rallyed nearly 55% in 2020, adding more than 1,100 points to a stock market that fell nearly 2% during that time. The split is scheduled to take effect on August 31st.
In a world where passive investing rules the stock market, a drop in weight in indices such as the Dow Average is likely to indicate an outflow of money managers mimicking benchmark changes. About $ 31.5 billion was indexed as benchmarked at the end of 2019, according to data from the S&P Dow Jones Indices.
A stock split “is an appeal to retail,” said Charles Day, a UBS executive director and private wealth adviser with more than $ 600 million in assets under management. “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 weighted by market capitalization, rather than stock prices.
Apple gathered the most in the Dow this year when consumers decided to refurbish new iPhones, iPads and Macs to stay connected during the pandemic. While any sale as a result of the weight change may turn out to be comparable to the company’s market value of $ 1.9 trillion, it’s not good news for a stock that generates relentless gains at a time when tech stocks are behind the market. left over the past month to deal with regarding appreciation.
Apple’s split is “theoretically declining demand from passive indexers,” wrote Julian Emanuel, strategist for equity and derivatives at BTIG LLC, in a note. “Combined with a generalized loss of momentum in the Nasdaq 100, AAPL could succumb to Newton’s Law of Gravity in the coming weeks.”
(Pricing updates on second paragraph.)
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