Nasdaq OMX to rebalance index; Apple weighting cut

By Peter Svensson

Associated Press

Published: Tuesday, April 5 2011 9:24 a.m. MDT

NEW YORK — Nasdaq OMX Group Inc. on Tuesday announced a rebalancing of the Nasdaq-100 Index next month that will significantly reduce Apple Inc.'s weighting in the index.

The Nasdaq-100 Index is made up of the 100 largest non-financial stocks listed on the Nasdaq stock market. It is one of the most widely watched market indexes, used as a barometer for the growth of large-cap U.S. stocks, with a weighting toward technology companies.

The index is tracked by mutual funds and exchange-traded funds. The rebalancing, which takes effect May 2, means that fund managers will have to shift their holdings to reflect the new weighting.

That will have a drastically cut the influence Apple's stock has on the index. The Cupertino, Calif., company currently accounts for 20 percent of the index, far more than its market capitalization would suggest when compared to other technology heavyweights like Microsoft Corp., at 3.4 percent, and Cisco Systems Inc., at 1.6 percent.

The rebalancing will reduce Apple's share of the index to 12 percent, and increase Microsoft's share to 8 percent. In morning trading, Apple shares slipped 28 cents to $340.91 after trading as low as $336 earlier in the session. Microsoft's shares gained 42 cents, or 1.6 percent, to $25.97.

The imbalance is due to Apple's skyrocketing shares. The company was worth about $10 per share in December 1998, when the weightings in the Nasdaq-100 were last adjusted.

Nasdaq OMX, the operator of the Nasdaq stock market, said the rebalancing will bring the weights of the companies in the index closer in line with their actual market capitalizations.

Sector weights will stay in the same relative order and magnitude, Nasdaq said.

Other tech companies that will see their weightings in the index more than double include Intel Corp., Oracle Corp. and Dell Inc. Their stocks rose on Tuesday morning.

Apart from Apple, companies that will lose much of their weighting include Starbucks Corp. and Intuit Inc. Both stocks were down Tuesday morning.

"The special rebalance reflects our commitment to ensure the Nasdaq-100 Index remains a relevant benchmark for investors around the world who track the performance of the U.S. equity market," John Jacobs, executive vice president, Nasdaq OMX Global Index Group, said in a statement.

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