S&P 500 could avoid a bear market, depending on Apple stock

“The S&P 500 looks like it can fall into bear market territory,” but, Jacob Sonenshine for Barron’s, “there is a good chance that won’t happen, though, thanks to Apple.”

Is Apple stock primed for a big move?

Jacob Sonenshine for Barron’s:

There are no shortage of fear factors that could put the index into such scary territory. It starts with the Federal Reserve, which is trying to reign in high inflation by hiking short-term interest rates and reducing its bondholdings, moves that will likely slow down economic and earnings growth. Plus, there are lockdowns in China. Limited supplies from the region results in higher costs for companies, yet another earnings-related concern.

In order for the S&P 500 to enter a bear market, the index would have to drop 20% or more from its high of 4796, hit on January 3. The index, currently at just over 4,000, would have to fall just over 4% to 3,836 to reach that point. Moreover, the index’s recent price trend makes that additional decline look to be within the realm of possibility…

But such a decline could be averted if Apple (ticker: AAPL) stock continues to do what it has recently done: hold up better than the broader market. Apple has outperformed the S&P 500 for the entire year. At just over $152 a share, Apple stock is still trading just above the $150 area at which buyers have consistently stepped in to send the stock higher several times in the past year-plus.

If Apple shares indeed stop declining, that would put a noticeable limit on the S&P 500’s potential drop. 

MacDailyNews Take: Basically, if Apple’s bottom holds above $150, the S&P 500 has a chance to remain above bear market territory thanks to Apple’s outsized market cap percentage of the index (over 7%).

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