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Apple’s Split to End Dominion of Dow Average’s largest stock



(Bloomberg) – Apple Inc .:’s planned share split will reduce its impact on the Dow Jones industrial average after the iPhone maker’s 100% power since the March flames almost pulled the price-weighted action to a peak.

At its current price of $ 452 per share, Apple has the largest weight in the index at 11%. A split-to-1 split would now lower its price tag to about $ 113 and send its Dow average ranking down to 16th. Apple has amassed nearly 55% by 2020, adding more than 1,100 points to a stock measure that has fallen by about 2% during that time. The division is scheduled to take effect on August 31.

In a world where passive investment regulates the stock market, a drop in weight in indices such as the Dow average is likely to lead to outflows from money managers that mimic benchmark changes. About $ 31.5 billion was either indexed or benchmarked to the meter at the end of 2019, according to data from the S&P Dow Jones Indices.

A stock split “is an appeal to retailers,” said Charles Day, a UBS chief executive and private wealth adviser with more than $ 600 million in assets under management. “It will make a difference for the Dow.”

However, the split does not affect Apple’s number 1 position in the S&P 500, an index that is weighted by market value rather than stock prices.

Apple has gathered the most in the Dow this year as consolidated consumers brought up new iPhones, iPads and Macs to stay in touch during the pandemic. Although all sales due to the weight change may pale in comparison to the company’s market value of $ 1.9 trillion, it is still not good news for a stock whose relentless gains are catching on at a time when technical stocks have lagged behind the market over the last month. in valuation problems.

Apple’s split is “theoretically declining demand from passive indexers,” wrote Julian Emanuel, head of capital and derivatives at BTIG LLC, in a note. “Combined with a generalized loss of speed in the Nasdaq 100, the AAPL may give in to Newton’s gravity law in the coming weeks.”

(Updates the prices in the second paragraph.)

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