Hit with somewhat of a blue-chip jinx, Apple Inc. (NASDAQ: APPL) stocks are losing some ground to AT&T Inc. (NYSE: T) since the trendy tech firm replaced the older telecoms company on the Dow Jones Industrial Average (DJIA) two months ago.
On March 18, after the market closed, the swap between AT&T and Apple became effective on the Dow.
Since then Apple’s stock has increased by $1.83, or 1.4%, through Tuesday’s morning trade, whilst a rise in AT&T shares of 88 cents, or 2.6%, has been seen. Meanwhile, during the same period, the Dow has risen around 241 points, or 1.3 percent.
Using the previous multiplier and since the Dow index is price weighted, Apple’s nominal price increase added around 12 points to the blue chip index’s price, while AT&T’s gain would add around 6 points to the Dow’s price.
Apple’s performance may surprise some investors, since being included in an index typically leads investors who track that index to purchase the new member, and to sell off the discarded one. However, some history enthusiasts may say the dreaded, “I told you so” as in some cases, we have seen a decline as in the case of Apple shares.
Since the S&P Dow Jones Indices implemented changes on the 20th September 2013, 2 of the three stocks that were removed from the Dow, namely Hewlett Packard Co. (NYSE: HPQ) and Alcoa Inc. (NYSE: AA), have performed better than their replacements Visa Inc. (NYSE: V) and Nike Inc. (NYSE: NKE) by around 16 and 7.6 percentage points, respectively.
On the other hand, the Bank of America (NYSE: BAC) has increased 16% since its departure from the Dow, while Goldman Sachs Group (NYSE: GS) who replaced Bank of America has gained 21 percent.
MT4 Chart: AT&T
MT4 Chart: Apple
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