Stock markets continued to slide as in Monday trading, with the S&P 500 and the tech-heavy Nasdaq falling. Shares of tech leader Apple didn’t escape the selling.
Why are investors worrying? Rising interest rates are one factor. The yield on 10-year Treasury notes hit 3.185% this morning, the highest level in more than three years. The Federal Reserve is raising rates in hopes of reining in inflation, but higher interest rates make it more expensive to buy big-ticket items such as cars and homes — and even pay credit card bills. Seen from this perspective, higher interest rates are themselves inflationary.
High interest rates depress consumers’ desire to spend, which obviously isn’t great news for a consumer electronics goods purveyor like Apple. And adding to investor worries on Apple in particular, Bloomberg is reporting this morning that COVID-19-related lockdowns in China are continuing to disrupt supply chains in one of Apple’s biggest manufacturing hubs.
Long story short, so long as restrictions remain in place in China, Apple’s supply chain problems can be expected to continue. When Apple warned investors last month that it’s expecting to suffer a hit to sales growth because of supply chain issues, it was just telling it like it is.
MacDailyNews Take: This too shall pass. (But, before it does, can we please have some sub-$150 action?)
Be fearful when others are greedy and greedy when others are fearful. — Warren Buffett
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