With Apple in, Dow would have set record long ago Associated Press Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Updated 08:27 a.m., Thursday, May 10, 2012 On Wednesday, it closed at $569. Because of how the Dow is calculated, Apple would dwarf the other stocks in the average and distort the Dow from its purpose — which is to reflect the broad economy, not represent the hottest stocks. The Dow is weighted so that a $1 move by any stock, no matter how cheap or expensive, moves the average the same — about seven and a half points as the Dow is calculated today. Because it's much easier for a $100 stock to move $1 than it is for a $20 stock, higher-priced stocks carry more importance. [...] why not add Apple, which has enormous cultural pull and admiration throughout corporate America — plus a market value of half a trillion dollars? The goal is to pick businesses that can stay in the average for a long time, says John Prestbo, the executive editor of Dow Jones Indexes, which maintains the Dow and other indexes. Prestbo, along with the managing editor of The Wall Street Journal and the research head of the CME Group, which owns a majority stake of Dow Jones Indexes, decide which companies make up the Dow. Three years ago, when GM and Citigroup got the ax, the group snubbed Apple and chose Cisco Systems, which makes computer networking equipment, and Travelers Companies, the insurance provider.
With Apple In, Dow Would Have Set Record Long Ago
Business Heds Index, Seattle Post-Intelligencer: Business
Thu, 05/10/2012 - 8:59am
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