Apple Inc. (NASDAQ:AAPL) is now an official blue-chip stock, as AAPL joined the Dow Jones Industrial Average this morning after replacing AT&T Inc. (NYSE:T) on the index.
Although Apple is the world’s most valuable company, its stock ranks fifth out of the Dow’s 30 weighted stocks that make up the index. Goldman Sachs Group Inc (NYSE:GS), 3M Co (NYSE:MMM), International Business Machines Corp. (NYSE:IBM) and Boeing Co (NYSE:BA) are ahead of Apple — for now.
At current levels, a 1% move in Apple’s stock price would equate into an 8.5-point gain or loss on the Dow.
I have said before that the Dow could reach 20,000 this year, and one of my main arguments for why that might happen was the inclusion of Apple. Although the Dow still has another 2,000 points to go to make this a reality, it was exactly what I have been planning for.
I have been cheerleading for this move and have mentioned this story off and on over the past year. In February, I wrote the following to my subscribers:
“The Dow came into 2015 at 17,823 and added 8% last year. The blue-chips could have some new members this year, although there has been no official word. I have talked how Apple (AAPL) would be the best candidate, but other companies should be considered to reflect more of a global index. I know it’s wishful thinking for the NYSE, but Apple’s addition could easily translate into Dow 20,000. This would represent a gain of 12% for the index.”
Before that, back in September of 2014, I wrote:
“There is a good chance that the Dow finishes the year above 18,000 as long as the major moving averages hold. I have talked about the blue-chips reaching 19,000 if Apple (AAPL, $101.66, up $0.23) shares were added to the Dow 30, but that may or may not happen this year. The NYSE needs a splashy “new” addition, and Apple fits that headline.”
While the pundits will say that the Dow added Apple at its peak, I disagree. In fact, if Apple makes a run to $200 this year or next, the Dow will be at 20,000 easily, as long as the rest of the blue chips pull their weights.
Shares of Apple traded to a high of $129.25 on the open today but have since slipped back. The recent 52-week high is north of $133.
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