Here's what a 1-point move in Apple does to the Dow

Finally, Apple has joined the Dow Jones Industrial Average, the 30-stock market index that aims to be representative of the US economy.

At $US128.27 right now, Apple is down $US0.20 or 0.16%. That’s taking 1.34 points off the Dow.

How’d we compute that?

The Dow is peculiar in that it’s a “price-weighted” index, meaning that stocks with the highest share prices have the most influence on the index’s movements.

According to S&P’s Howard Silverblatt, the current Dow divisor 0.14859, which means that a 1-point move in any Dow stock moves the Dow by 6.7299 points. So if you want to calculate how many points a Dow stock is adding to or subtracting from the Dow, use this formula:

(Dollar change in stock price) x 6.7299 = (Point change in the Dow)

Apple’s down $US0.20. So:

-0.20 x 6.7299 = -1.34 points

This obviously gets much more interesting on the more volatile days. For example, if Apple has an ugly earnings announcement and the stock falls 9%, it will hack 77 points from the Dow.

It’s recent price makes Apple the fifth most influential stock in the Dow. Goldman Sachs, 3M, IBM, and Boeing all have higher share prices and thus have more influence on the Dow.

That’s pretty much all you need to know about that.

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