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Market Blog

Apple shakes off losing streak Add to ...

Apple Inc. seems to have shaken off concerns emanating from its recent five-day losing streak, rising more than 3.2 per cent on Tuesday, as of midday. Like the downturn that preceded the rebound, there’s little news driving the action – although a combination of big year-to-date gains and an upcoming quarterly earnings report look like the most likely culprits.

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Seven analysts over the past two days have confronted the recent volatility, updating their views on the stock. They’re not blinking: All seven maintained bullish recommendations on Apple, along with price targets ranging between $710 (U.S.) and $910. What’s more, Raymond James initiated coverage on the stock this week with a “strong buy” recommendation and an $800 target that suggests that they, too, are not fazed by the turbulence.

There’s a lot more at stake here than the fate of one company, which is why the direction of Apple’s share price is a matter of concern for all investors – or least those with exposure to the U.S. market, which is nearly everyone. Apple’s spectacular gains in recent years have made the company the largest in the world, based on market capitalization. And that has put Apple at the top of the S&P 500, in terms of its weighting within the large-cap index.

You could see the effects of Apple’s size in stock market activity on Monday. The S&P 500 ended the day down nearly 1 point; the Dow Jones industrial average, which doesn’t include Apple, rose 72 points. With Apple up on Tuesday, the S&P 500 was outperforming the Dow (though only slightly).

Meanwhile, you can see why there is so much emphasis on Apple’s upcoming quarterly earnings report, due to be released after markets close on April 24. In January, when Apple last reported its quarterly results, it blew past expectations: Sales jumped 73 per cent, to $46.3-billion; earnings more than doubled, to $13.1-billion. The results were so strong that they had a huge impact on overall S&P 500 earnings for the quarter – reinforcing the impression that a bet on U.S. stocks is increasingly becoming a bet on Apple.

Since those quarterly results from Apple were released, the share price has zoomed about 42 per cent, expanding the company’s market cap – or the value of all its shares – by an astounding $165-billion.

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