So what do these rumors and the sudden movement of AAPL stock today (given the relative calm in the markets in general (and lighter volume) both yesterday and today) mean for the market and AAPL specifically. We will have to watch closely to see if the rumor specifically of a potential stock split does indeed have any truth to it, because an announced stock split would obviously help the folks at Dow Jones make a quicker decision in potentially adding AAPL to their index, on the basis that it would “work better” if AAPL had a lower notional price.
Thus, the price weighted index itself, the DJIA, would not necessarily be unduly influenced by the day to day action in AAPL if the stock were say “$60 (implying a 10 for one split). If this were indeed to happen from start to finish (i.e. rumor becomes truth, AAPL announces stock split, AAPL eventually becomes a Dow component at a fair “price”, i.e. $200 or less) there will indeed be money in motion for any indexes/derivatives and managers that are benchmarked if not directly invested in and/or linked to the DJIA. Thus, any upward price pressure in AAPL stock itself, would be felt also in the NDX (given the 18% and rising, current weighting), and for the same reasons, in the SPX (given the 4.54% and rising, current weighting).
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Full disclosure: Tom Lydon’s clients own QQQ and AAPL.