Last week saw the share price of Apple having its worst weekly decline since February. The slump in Apple’s stock price of 4.6% signaled that the fightback of tech stocks after the Fed meeting was over. Other big tech brands like Microsoft and Alphabet saw a dramatic decline in their share price over the week.
Much of this change has been attributed to last week’s Federal Reserve meeting that signalled an end to the monetary relief in March 2022, along with interest rate increases throughout next year. These measures have been implemented in a bid to stave off the worrying inflation rates that recently reached their highest levels in 30 years. Apple stock has a higher valuation than many other stocks and if there was an interest rate increase, it could seem less valuable if it suffers from a decrease in its profit growth.
All of this is being played out against a concerning backdrop of the new Covid variant – Omicron – that is threatening to wreak havoc on the US economy. With news that Apple would be reinstating its mask mandate in its US stores and limiting store capacity, it comes at a worrying time for what should be one of the busiest retail periods of the year.
Apple still on course for a great year
While last week’s dip in share price will have concerned investors, Apple is still on an undeniable upward trajectory. The value of Apple stock has grown nearly 30% since the beginning of 2021 and it is far outperforming the rest of the Nasdaq and S&P 500 indices.
Plus it’s worth noting that the majority of other big tech brands also had a difficult week. Apple’s chief rival, Microsoft, saw its stock value fall by 5.5% which was its worst weekly decline in over a year. It was also a difficult week for Google’s parent company, Alphabet, that saw 4.2% wiped off its stock value.The only exception to this trend was Facebook or Meta Platforms which saw a weekly stock price increase of 1.2%.
The reason why most tech stocks were down was the fact that they are seen as being more volatile and less profitable when higher interest rates are introduced. With last week’s Federal Reserve meeting hinting at three interest rate increases in 2022, it triggered moves to invest in relatively stable commodities like gold and silver rather than risk it on tech stocks like Apple.
Despite all the gloom about a resurgence in the pandemic, many financial institutions are still feeling very positive about Apple. This week saw the Bank of America upgrading its rating of Apple stock as predictions were made that the tech brand will enjoy better-than-expected sales of its iPhone in 2023. Plus with an augmented reality headset due to drop at some point in 2022, it should ensure that Apple’s stock price continues its upward trajectory.
