Why Apple stock got bit on Monday

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 Apple stock got bit on Monday

Rich Smith for The Motley Fool:

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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  1. Apple shareholders are some of the biggest worrywarts around. Sure, I get that Apple isn’t going to have a blockbuster year due to Covid lockdowns, chip shortages, EU complaints and the ongoing war. Still… these shareholders are frightened they might lose some money but where are they going to move it to. Their mattresses? All companies are going to be suffering from the weak world economy, so the shareholders should just hold pat with what they have. Apple is likely faring the best of all FAANG stocks in terms of holding its value.

    I’m somewhat glad those Nervous Nellies are selling off their Apple shares as it makes it cheaper for Apple to buy back more of its outstanding shares. My money will remain in Apple and I would be buying if I had a need to buy more Apple shares. However, I already have enough Apple shares at my advanced age. I’ll never understand this massive stock dumping when Apple is still a solid company. It just seems foolish to me how investors are dumping most stocks, in general. I suppose investors have their reasons, but are those reasons financially sound.

    1. Don’t be so certain of that. It slightly broke 150 a few weeks ago and came 1.5 points today from hitting 150. But the overall market is skittish to say the least. Apple’s P/E is about 24.5 right now(price 152). For the last 2 years (cheap money) that is a bargain. But with the cost of money going up and projected to continue to go up, higher P/E stocks are going to get a lot of sell side pressure from a lack of buy in flows.
      Anything could happen and 150-ish could be Apple’s absolute S line but I’d be cautious about putting money even into performers like Apple. Best advice I’ve heard lately: the current best strategy for your trading capital is to target a limiting of the damage.

  2. AAPL is an equity that’s becoming bond-like. Bond-like in the sense that it’ll be moved by the market, but better asset protection…less risk.

    Yes, lower (now +$30/share below high) and will likely drop more, imo.

  3. It is down big today because QQQ/SPY are down big. Unless you are a lower float penny stock(stock is controlled by insiders and retail/non algo), for some reason your industry is bucking the trend (likely news catalyst) or an individual company has a positive news catalyst, everything will be down in a range from 1 to 3 percent (for some a lot more). How much you are down today may be commensurate with how much you’ve been down recently (it was down heavier in the last big red day so it is down a bit lightly on this one. It’s the games algos play).

  4. I disregard anything by Motley Fool or their people… they write pure psychobabble largely on the backs of real reporting by real investment brokers.

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