Blitzer of S&P Dow Jones said after the last round of changes to the measure in September 2013 that Apple and Google Inc. were handicapped by share price.
“Clearly, Google and Apple are huge companies, very big and very well known, and there’s no question that they’re very important to the U.S. and the global economy,” he said in a conference call with reporters at the time. “The prices of their stocks are so high that putting Google in would completely distort the index and it wouldn’t work.”
The five-year bull market has pushed the number of companies in the S&P 500 with share prices above $100 to 90 as of the close today, almost three times the level in 2010. Google Class A shares closed at $537.51, effectively making them too expensive for inclusion in the Dow average even after what amounted to a 2-for-1 stock split this month.
Membership Changes
Stocks are chosen for the average by a committee, unlike most indexes maintained by S&P Dow Jones that are picked through an objective, rules-based process. While changes in membership are unusual, they often involve more than one company at a time, according to Dow’s guidelines.
The average was last reshuffled in September, when Goldman Sachs Group Inc., Nike Inc. and Visa replaced Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc.
The Dow average was devised in 1896 by Charles H. Dow, co- founder of Wall Street Journal publisher Dow Jones & Co. It originally included General Electric Co., American Tobacco and 10 other companies before expanding to 20 companies in 1916 and 30 in 1928.
“We’re talking about Apple here,” Ryan Jacob, manager of the Jacob Internet Fund, which oversees $90 million including Apple shares, said in an interview in New York. “It would be significant because the Dow is supposed to be representative of the economy and Apple is one of the biggest companies in the world and a technology leader.”