An Apple Event Flop Could Make the Stock Market Tumble
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Apple’s ‘Peek Performance’ event Tuesday will be closely watched by investors.
Hector Retamal/AFP via Getty Images
Apple
’s
product launches are always closely watched affairs. But the latest event, scheduled for Tuesday, likely will be monitored even more so because what’s at stake goes beyond a new iPhone or Mac laptop.
As the world’s most valuable public company and a leader in Big Tech, news about
Apple
(ticker: AAPL) can have an outsized influence on the technology sector and the rest of the stock market.
Apple is the single-largest and most influential constituent of both the
S&P 500
and
Nasdaq Composite
indexes. The information technology sector is the biggest segment of the
Dow Jones Industrial Average,
of which Apple is also a constituent. Any bad news or dampened sentiment about Apple not only tends to fray the nerves of tech investors, but can, by virtue of both Apple and the wider sector’s heavy weighting in indexes, pressure the wider market.
The reverse can also be true. In January, as investors began to panic amid signs that the Federal Reserve would raise interest rates multiple times in the year ahead to fight inflation, good news from Big Tech helped shift the narrative. After-hours earnings reports from both Apple and its peer
Microsoft
(MSFT) were linked to turnarounds in U.S. stock index futures for the next day.
Markets have started this week in turmoil, with the Russian invasion of Ukraine, spiking oil prices, inflationary concerns, and an environment of tighter monetary policy ahead all weighing on investors’ minds. It’s only the latest gloomy Monday of 2022 for traders.
The S&P 500 is down almost 10% this year, and breaching that milestone would put it in correction territory. The tech-heavy Nasdaq is down 17% since its November high, getting close to dreaded 20% bear market territory.
These declines have been met with incredible volatility.
Wall Street’s so-called fear gauge, the CBOE Volatility Index — known as the
VIX
— rose above 33 on Monday, and was on track for its highest close since October 2020, when the U.S. faced fears of a second wave of the Covid-19 pandemic. When the VIX is above 30, it typically indicates significant fear among investors about the outlook for stocks over the next 30 days.
In a market as volatile as this one, a single piece of good news or bad — like a Russian attack on a Ukrainian nuclear plant last week, which saw stocks plunge — can make all the difference. Apple’s high-profile product launch event has the potential to set the stage for a turnaround, or exacerbate investors’ concerns.
Broker and investment bank Wedbush, which rates Apple at Outperform with a price target on the stock of $200, implying 23% upside, expects three outcomes from the “Peek Performance” event on Tuesday. These are a third iteration of Apple’s more-affordable iPhone SE, a new iPad Air 5, and at least one Mac release, like a fresh13-inch MacBook Pro.
“Overall in this volatile geopolitical climate with a general risk-off preference among investors as the horrific and heartbreaking Ukraine invasion causes market jitters, we believe Apple is a safety tech name to own during this market storm,” said Dan Ives, an analyst at Wedbush, in a note on Sunday.
Tuesday will tell — and a flop is likely to be felt beyond Silicon Valley.
Apple stock was down 0.5% Monday, while the Nasdaq Composite fell 1.3%.
Write to Jack Denton at jack.denton@dowjones.com
