U.S. tech stocks fell sharply last week but rebounded on Friday, which seemed to herald the end of the endless sell-off. Still, Apple shares are sending warning signs, and even Friday’s rally has struggled to make up for it.
Apple stock, which has been stabilizing the broader market for the past year or so, fell sharply last week, down 9 percent as of last Thursday. Despite Friday’s rebound, Apple stock has underperformed the S&P 500 this year. Analysts warn that the situation is worrying.
Nicholas Colas, co-founder of DataTrek Research, said: “It’s unsettling signs like this, the market is so tough, Apple is one of the best stocks, but investors are still not interested.” He believes that investors are selling Apple shares. Risk aversion is the trend.
Apple stock has outperformed the S&P 500 for most of the year. Apple has the largest weight in the S&P 500. After all, its valuation is more than $2 trillion, which will largely influence the direction of the index. If Apple shares continue to fall this week, it could trigger another drop in the index.
Kim Forrest, chief investment officer and founder of Bokeh Capital Partners, said: “You want the S&P 500 to rise when the largest stocks keep falling? Mathematically, it’s impossible.” She believes that Apple’s stock price has plummeted, making the Investors are chilling.
Shares of Apple rose 3.2 percent on Friday, but fell more than 6 percent last week, wiping $165 billion off its market value. On Wednesday, Saudi Aramco surpassed Apple in market value thanks to rising oil prices.
When markets are volatile, investors tend to look to Apple stock as a safe haven because of its high profits. But now investors are starting to sell speculative growth stocks, which are more vulnerable to high interest rates and inflation because their valuations are based on promises of future profits.
Looking at it another way, the sell-off could mean investors finally capitulate, and shares could bounce back, Forrester believes.
Continuing to put money in despite the sell-off, they’re still buying Apple stock. In the five days leading up to May 11, Apple ranked second among stocks purchased by individual investors traders.
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