Apple joins Dow industrial average, AT&T is out

S&P Dow Jones Indices announced that Apple (AAPL) will replace AT&T (T) as part of the 30-member Dow Jones Industrial Average after the close of trading on March 18. The move represents a rebalance of the index away from telecom and toward technology stocks.

Apple's stock price was up a little under 2 percent Friday morning, while AT&T shares were down a little more than 1 percent. Outside of a shift in prestige, the change will probably have little impact on either of the companies.

Triggering the switch was a 4-to-1 stock split by Visa (V), set to happen at the same time. According to S&P Dow Jones Indices spokesperson Soogyung Cho Jordan, Visa is considered an information technology sector stock because it is a payment technology. The split will remove about 7 percent of Visa's weight on the index, which is calculated by share prices, not by market capitalization.

At the same time, the "weighting of telecom in the Dow Jones Industrial Average is very heavy compared to the S&P 500," Jordan told CBS MoneyWatch. "What we like to do for both the industrial average and the S&P 500 [is] to reflect each other because they're highly correlated."

Both Verizon and AT&T are similar, but AT&T has the lower stock price and market cap, so AT&T is the stock that will be dropped from the DJIA. Apple is added because of its prestige and importance to technology. Tech companies Microsoft (MSFT), Intel (INTC) and Cisco (CSCO) are already on the index.

What makes Apple's addition possible is another stock split. Apple had a 7-to-1 split last year. Even with recent gains, the share price is under $130. Pre-split pricing would likely have been too high and been an outsized influence on the weighted average.