Apple's meteoric rise triggers realignment of NASDAQ index

The NASDAQ on Tuesday announced that it had changed the weighting of stocks in its NASDAQ 100 index, a move that seemed to affect Apple and Microsoft the most. The changes were necessary due to the fact that the index had not been realigned in quite some time amid the rapidly changing nature of the tech landscape.

For example, before the realignment Apple had a market value that is 46 percent larger than Microsoft, but a weight in the NASDAQ that was some six times as large. Following the realignment, the weight difference has been reduced to about the same as its market value, the apparent intention of the stock index.

Apple's share of the NASDAQ 100 would change from 20.49 percent to 12.33 percent, while Microsoft's would increase from 3.41 percent to 8.32 percent. These were the largest changes percentage-wise in weighting. Oracle, Intel, and Cisco also saw their weight in the index at least double.

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All changes will take effect on May 2, the NASDAQ said.

Why was Apple weighted so heavily to begin with? The simplest explanation could be the company's past. At the time of the last major weighting changes in the late 1990s, the company was still in dire straits. In order to make the stock relevant in the index, its weighting needed to be increased.

As other companies entered the index, and rules on how the weighing is calculated changed, several stocks were given either too much or too little weight in the index. With Apple being affected by far the most, the company's stock may see a good deal of selling in the next several weeks as funds that use the NASDAQ 100 as a base sell off excess shares to realign themselves.

While shares of Apple fell about 3 percent in early trading on Tuesday, it recovered to trade essentially flat at the close. Shares of Microsoft were up 1 percent.

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