Why Apple Loses $800 Billion? – Tech Stocks
After exceeding $3 trillion in January, Apple lost more than $800 billion in capitalization; Technical stocks fell due to growing concerns; an increase in the Federal Reserve’s interest rate could throw the US into recession; The 2 trillion dollar milestones are questionable. Apple closed $2.15 trillion on Tuesday. According to the CEO of New Constructs, just as Apple has benefited from the bull market provided by the Fed, it will suffer from the disappearance of low-interest rates and quantitative easing subsidies.
Economists predict that the Federal Reserve will raise interest rates by at least half a percentage point on Wednesday; Some will raise the forecast by 0.75 points amid stronger-than-expected data from Friday’s inflation. Further growth is expected this year. All of this can lead to the sale of technology stocks, which are particularly vulnerable to higher interest rates; They aggravate current estimates of companies’ future profits.
It is worth noting that Apple, Meta Platforms, Netflix, Amazon, and Alphabet were the children of the two-year bull market, which was gathering at an alarming rate across historical estimates. This year, it evaporated rapidly, and the group lost a combined $2.6 trillion in market value. Investors shunned growth names for safer assets. Amazon is also close to down $1 trillion.
Apple and Experts
Analysts are also cautious. Over the past three months, they have cut Apple’s fiscal third-quarter profit by 7.8%. Revenue forecast for the same period decreased by about 4.2%. The stock also has the lowest share of analysts’ buying ratings in more than a year. KeyBanc Capital Markets are showing signs of softer demand in the US, With the motive of spending credit card data. Others have expressed concern about revenue growth in the company’s App Store. According to Morgan Stanley, this threatens ratings for Apple’s service business. According to Bloomberg, Apple received 18.7% of fiscal revenue in 2021 and services with more than 30% of total profit.
Apple stock problems have intensified this year with a 24% drop. Saudi Aramco has won the title of the most valuable company in the world. First, technical stocks are under pressure from rising interest rates, economic slowdown, and high inflation. The tech giant is also facing supply restrictions related to Covid-19 restrictions in China. In April, he warned that revenue could reach $4 billion to $8 billion in the current quarter.
History has shown that it can take years for technology stocks to climb to the pinnacle of a bull market; If it ever happens. Cisco Systems was the star of technological rage in the late 1990s; It is still 46% behind the all-time peak of March 2000. According to strategists, there are always names that lead in some eras; However, it takes them years to regain a record level. Just because they continue to grow does not mean that these names will regain their leadership.
European Stocks Drop
European stocks fell on Thursday; The US Federal Reserve decision raised concerns about aggressively raising interest rates about the potential recession when global economies are facing high inflation. The STOXX 600 index fell 0.4%, although European stock futures recovered overnight; Once Wall Street had risen and closed higher. The retail sector declined the most, by 2.1%. ASOS lost 14.3%; Since the warning was that inflationary pressures were affecting trade behavior. Zalando decreased by 7%.
The Fed raised its target interest rate by 75 basis points on Wednesday. It is worth noting that this is the most significant increase since 1994. Accordingly, it predicted a slowdown in the economy and rising unemployment in the coming months. FTSE 100 fell 0.5% ahead of the Bank of England policy meeting; this should increase interest rates. Roche decreased by 0.6%.
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