Who are the heavy­weights of the stock mar­ket?

The China Post - - WORLD BUSINESS - BY STEVE ROTH­WELL

At US$660 bil­lion, Ap­ple is the stock mar­ket’s heavy­weight.

Like a hand­ful of other “big cap” com­pa­nies such as Mi­crosoft and Exxon Mo­bil, the iPhone maker’s mar­ket value means that when its shares move, so can the mar­ket. And these are the com­pa­nies that in­flu­ence your stock port­fo­lio.

“The com­bi­na­tion of Ap­ple’s size and price moves, re­sults in an enor­mous im­pact on in­dices,” says Howard Sil­verblatt, a se­nior in­dex an­a­lyst for S&P Dow Jones In­dices.

Lately, Ap­ple’s been a drag.

Since clos­ing at a record US$133 on Feb. 23, Ap­ple has slumped to US$116.53, wip­ing more than US$ 120 bil­lion off

in­flu­ence has the value of its stock. Be­tween then and Tues­day’s close, the Stan­dard & Poor’s 500, the most widely-tracked stock in­dex, was down 0.8 per­cent.

With­out Ap­ple, the de­cline would have been 0.2 per­cent, ac­cord­ing to S&P Dow Jones In­dices, the com­pany be­hind the S&P 500 in­dex and the Dow Jones in­dus­trial av­er­age.

Of course the op­po­site is also true, when Ap­ple’s shares rise, the mar­ket can get a lift.

The im­pact of the tech­nol­ogy gi­ant is so big that S&P Dow Jones In­dices has cre­ated a tech­nol­ogy in­dex that ex­cludes Ap­ple.

That al­lows in­vestors to sep­a­rate what’s go­ing on with tech stocks from what’s go­ing on with Ap­ple be­cause, while they’re sim­i­lar, the two might not be the same.

For ex­am­ple, the S&P 500 in­for­ma­tion tech­nol­ogy sec­tor is down 2.3 per­cent since Ap­ple’s record close. Take out Ap­ple and the group has ac­tu­ally gained 0.7 per­cent.

History sug­gests that com­pa­nies as dom­i­nant as Ap­ple don’t tend to stay top dog for long. Com­peti­tors emerge, new prod­ucts roll out, and growth can slow.

Exxon Mo­bil, which Ap­ple sur­passed to be­come the big­gest pub­licly-traded com­pany in Au­gust 2011, has slumped over the last year along with the price of oil. To be sure, Exxon Mo­bil is still big, with a mar­ket value of US$323 bil­lion, but it has slipped to third in the rank­ing of S&P heavy­weights, be­hind Mi­crosoft.

In the early 1980s, com­puter com­pany IBM was the stock mar- ket’s big gun. Per­sonal com­put­ers were still a new con­cept and IBM was one of the in­dus­try’s dom­i­nant play­ers. At the end of 1985, the com­pany’s stock made up 6.4 per­cent of the S&P 500’s to­tal value, much big­ger than Ap­ple’s cur­rent 3.6 per­cent.

Since then, the com­pany has had to grap­ple with fierce com­pe­ti­tion from more nim­ble ri­vals. Like Exxon, Big Blue is still pow­er­ful, but it now ranks as the 28th largest in the S&P 500, mak­ing up 0.8 per­cent of the in­dex.

AP

In this May 9, 2013 file photo, peo­ple walk near the Ap­ple store in Santa Mon­ica, Cal­i­for­nia. Even af­ter its re­cent slump, Ap­ple’s mar­ket value is still two thirds big­ger than Mi­crosoft, the next big­gest pub­licly traded com­pany in the U.S.

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