Why Apple Isn't in the Dow

Since 1896, when the 's first editor and co-founder, Charles Dow, compiled a portfolio of bellwether industrial stocks, the Dow Jones industrial average has sought to reflect the changing U.S. economy. The benchmark has sometimes been slow to keep up with the times. The Dow booted Woolworth for Wal-Mart (WMT) in 1997 and didn't add Microsoft (MSFT) and Intel (INTC) until 1999. Even so, the 30-member index remains the most widely recognized measure of the market. "With each rebalancing of the Dow Jones industrial average, the selection committee looks to ensure the Dow reflects the current sector composition of the U.S. market," says John Prestbo, editor and executive director of the Dow Jones Indexes, majority-owned by CME Group since February 2010.

Today the Dow is notable for one giant omission: Apple (AAPL), the world's leading tech stock. With a market value of $307 billion as of June 14, the maker of iPhones and Macs is the second largest company in the U.S., behind ExxonMobil (XOM), a Dow component, and almost as large as Microsoft and Intel combined. "Apple should be in the Dow," says Paul Hickey, of Bespoke Investment Group in Harrison, N.Y. "Just as there used to be a General Motors (GM) vehicle in nearly every American driveway, there's now an Apple product in practically every American household."