AT&T Inc. (T, -1.53%) has been booted from the Dow Jones Industrial Average (DJIA) and Apple Inc. (AAPL, +0.15%) will be taking its place. As a result, the shares of Apple advanced 1.7 percent on Friday but the shares of AT&T declined by 1.3 percent in morning trade. Before you shed a tear, this booting could be positive for the telecom giant. While it is fact that many stocks perform better when they enter a major index in the market, a study done by Jeremy Siegel at the Wharton University showed that since the S&P index (SPX) was created in March 1957 until 2006, companies that were deleted from an index outperformed those that were added. Evidence of this is clearly seen by those companies who already got the boot from the DJIA such as Hewlett-Packard Co. (HPQ, -2.41%), Bank of America Corp. (BAC, +1.38%) and Alcoa Inc. (AA, +0.70%) which performed better than those added such as Visa Inc. (V, -1.75%), Goldman Sachs Group (GS, -1.67%) and Nike Inc. (NKE, -1.57%). For example, when Hewlett-Packard exited the Dow, the share price gained 58.78% while its replacement, Visa, only gained 37.75%. On average, those exiting the Dow have had an average percentage gain of 49.4 percent compared to those entering whose average is three times less at 16.9 percent over the same time.
With a second straight week of losses, U.S. stocks declined on Friday. Topping it off was the S&P 500 index which suffered its steepest decline in two months. This came after the release of a stronger-than-expected jobs report which boosted ten-year Treasury yields and the U.S. dollar (USD) and which prompted investor fears that the Federal Reserve could increase interest rates by June. According to the report by the U.S. Labor Department, the economy added 295,000 jobs in February beating a forecast of 240,000. Also improving was the unemployment rate which declined to 5.5 percent. Despite this upbeat data, wage growth was poor only increasing by 2 percent. As a result, the S&P 500 index (SPX) declined 1.4%, or 29.78 points to 2,071.26. This benchmark index fell 1.6 percent over the week. Also on the downside was the Dow Jones Industrial Average (DJIA) which declined 1.5%, or 278.94 points, to 18,056.78, losing 1.5% over the week. Following the downward trend was the Nasdaq Composite index (COMP) which declined 0.3%, or 55.44 points, to 4,927.47 recording a weekly loss of 0.7 percent.
After data showed on Friday that the U.S. economy added more jobs than expected, the U.S. dollar (USD) traded higher. Boosting the greenback also was the unemployment rate which fell to its lowest level since mid-2008. In a separate report, data also showed that the trade deficit in the U.S. narrowed from $45.60 billion in December to $41.80 billion in January missing analysts’ expectations for the trade deficit to narrow to $41.70 billion. In Forex trading, the EUR/USD traded at 1.0883, down 1.31% to a 12 year low. The Swiss franc also traded lower against the greenback with USD/CHF up 0.80% and trading at 0.9818 while USD/JPY was also up 0.81 percent at 121.11. Against the British pound and the Australian dollar, the USD traded higher with GBP/USD down 1.08% to 1.5081 and AUD/USD down 0.55% at 0.7739. Also, the U.S. dollar index was at 97.49, up 1.13 percent.
In Asian trading on Monday, crude oil prices declined. This came in response to data out of China which showed an overall drop in imports while exports surged. On Sunday, China reported that exports increased by 48.3% last month from a year earlier while their trade surplus for the January and February period was at $60.6 billion missing expectations for surplus of $10.8 billion. Crude oil for April delivery traded at $49.44, down 0.35% on the New York Mercantile Exchange. Meanwhile, Brent for delivery in April traded at $59.73 a barrel, down 1.24%, or 75 cents, on the ICE Futures Exchange in London.