Apple's surging valuation distorting stock market indexes

The rapid escalation of Apple's profits and corporate valuation are overshadowing the performance of other companies so much that analysts are highlighting how different the market would look like without Apple.

In an attempt to provide a clearer picture of American corporate earnings, a report by the Wall Street Journal notes that UBS analyst Jonathan Golub has published two versions of his quarterly earnings picture for the S&P 500, one including Apple, and one without.

The contrast highlights how much Apple contributed to the index's 6.6 percent year over year increase in the winter quarter; without the company, the gain drops to just 2.8 percent. With Apple, the S&P 500's profit margins were up 0.05 percent; without they were down 0.22 percent.

Golub wrote, that "by stripping away that one single company, it is like seeing light through a prismâ€”you see things more clearly."

The report cited analyst Barry Knapp of Barclays Capital as saying, "what's happening with Apple is real, because Apple's earnings are real and any wealth accruing to Apple gets into the hands of U.S. shareholders. But to actually be able to look at trends and look at what's happening to [other companies], not just the one that's so exceptional, it is important to strip Apple out."

Were Apple in the Dow Jones Industrial Average

Alternatively, blogger Adam Nash of Greylock Partners notes that, had Apple been added to the Dow Jones Industrial Average rather than Cisco back in the summer of 2009 when the DJIA was last redefined, the Dow would be up over 2,000 points.

Nash noted on Monday that Dow closed at 12,874.04, and had it included Apple rather than Cisco, it would instead be at 14,926.95, 800 points higher than its peak set in April 2008.

"Can you imagine what the daily financial news of this country would be if every day the Dow Jones was hitting an all-time high? How would it change the tone of our politics? Would we all be counting the moments to Dow 15,000?" Nash wrote.

"Look, Iâ€™m just going to say it. The Dow Jones Industrial Average is ridiculous," he observed, adding, "You may not realize this, but the Dow Jones Industrial Average, the â€œDowâ€ that everyone quotes as representative of the US stock market, and sometimes even a barometer of the US economy, is a mathematical farce."