Shares of Apple slumped on Thursday to fall 22% below their January high as the sell-off in tech stocks spreads from speculative stocks to the world’s biggest companies.
The shares fell more than 3% to $141 and were trading at their lowest level since Oct. 14. The crash has wiped about $696 billion from Apple’s market value since the record high on Jan. 3.a drop that allowed Saudi Aramco, which has benefited this year from rising oil prices, to overtake the tech giant as the world’s most valuable company.
This is how the oil company remained with a market capitalization of US$2.382 billion and Apple falling to US$2.304 billion; Microsoft follows in third place with US$1.915 billion.
The widespread weakness in tech companies has been fueled by concerns about inflation and rising interest rates. The Nasdaq 100 index has fallen more than 7% in the last four days and is on track for a sixth consecutive week in the negative, its longest losing streak since 2012.
“Sentiment is very depressed, and uncertainty around inflation will continue to complicate the picture,” said Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services. “Even though prices are getting cheaper, we need a spark to start moving up, and I don’t see any.”
While the Nasdaq 100, heavily weighted in tech stocks, has been under pressure all year, Apple’s decline has been relatively recent. The stock is down almost 10% this week alone amid growing concerns about an economic slowdown.
It’s a sudden turnaround for Apple from about six weeks ago, when shares were trading near their record high and strongest on Wall Street. The stock is on track for a seventh consecutive weekly decline, which would represent the longest losing streak since November 2018.
Apple continues to face supply chain challenges, which the company predicted would cost $4 billion to $8 billion in revenue during the current quarter. Still, its strong balance sheet, hefty profits and loyal customer base have partially insulated it from the turmoil in the tech sector.
The stock continues to outperform the Nasdaq 100 index, which has lost almost 30% of its value so far this year, compared with the company’s drop of around 19% in the same period.
Lerner suggested that weakness in Apple and other big tech companies could be a sign that markets are bottoming out. “You want to see the bigs fall to find a good bottom, so this could be positive from that perspective, although we can always be more oversold.”
The benefit of oil
Saudi Aramco traded near its highest level on record on Wednesday, with a strong capitalization, ahead of Apple for the first time since 2020. Even if the move proves short-lived and Apple returns to the top spot, the reversal of roles underscores the power of the main forces that the global economy is going through.
High oil prices, while great for Aramco’s profits, are exacerbating rising inflation that is forcing the Federal Reserve to raise interest rates at the fastest pace in decades. The higher the rates, the more investors will discount the value of tech companies’ future income streams and push their share prices down.