Analysts believe that the sharp decline in Apple stock over 3 sessions may indicate that the US market is approaching the bottom.
“I think the current bear market is only going to end with the best stocks and stocks that everyone feels are safe to have pulled back,” said Chris Veroney, analyst at Strategas partner.
This year, analysts view the iPhone maker’s stock as a safe haven in the midst of a sell-off in the market, and expect it to outperform the broader market.
The stock fell by 8.6% in 3 sessions
Apple’s stock has fallen regarding 22% this year, compared to the S&P 500’s 24% decline.
But the company’s stock fell by 8.6% in 3 sessions following a report indicating that Apple had backed off plans to increase production of the iPhone 14, and Bank of America lowered its assessment of the stock from buying to neutral.
Selling pressure on the most influential stock
Although Apple’s decline may be the result of specific concerns regarding the company’s performance, some analysts have said that it may be a sign that a bear market bottom is on the horizon.
“Usually the weakest ones are hurt first, then the mid-performers and at the end the strongest, it can be shown that we are nearing the end of the bear market because Apple, which has been holding on to the best performance, is under pressure,” said an analyst at MKM Partners.
He added: Apple’s stock is the largest in terms of value in the S&P500 index, as it constitutes 7% of the index’s size, which indicates that large fluctuations in the stock have a huge impact on the index.
He continued, “If Apple tests its lowest level in June, this indicates that the largest and most influential stock fell by regarding 10%, and this would add enormous downward pressure on the markets.”
Ari Wald of Oppenheimer also agrees, asserting that Apple’s sell-off usually indicates that the stock market is nearing a bottom because the stock is often sold off in the later stages of a capitulation.
