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Why AT&T doesn’t care it left the Dow

Stan Alcorn Mar 19, 2015
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Why AT&T doesn’t care it left the Dow

Stan Alcorn Mar 19, 2015
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When the stock market opened on Thursday, Apple was part of the Dow Jones Industrial Average for the first time. AT&T was not.

What effect will that have on AT&T’s stock price? “You would need a microscope to see the impact,” says Jim Angel, associate professor of finance at the McDonough School of Business at Georgetown University. 

Angel says that’s because it’s a huge company with plenty of stock, and relatively little of it is owned by index funds that simply buy the 30 stocks in the Dow Jones Industrial Average. 

“People follow the Dow because people in the past followed the Dow,” says Kevin Landis, chief investment officer of Firsthand Funds. But it’s the bigger, newer indices like the S&P 500 that attract most of the index fund moneyand have the most market-moving clout.

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