The market sell-off finally captured the last Big Tech hold, and now investors will wait to see if that was the final straw before a rebound. Apple fell 5.2% on Wednesday and closed 19.9% below its intraday all-time high. It fell another 2.7% on Thursday, sending the tech stalwart into an official bear market, down 22% from its previous high. It now joins its so-called “FAANG” brethren, Facebook parent Meta Platforms, Amazon, Netflix and Google parent Alphabet, in a bear market, along with software giant Microsoft. Source: FactSet Apple’s decline marks an important milestone in this market decline. The weakness in speculative areas of the market, such as unprofitable technology and cryptocurrencies, began late last year. Many of the stocks of companies that are losing money have fallen by 50% or more. However, Apple is an extremely profitable company that earned more than $100 billion in GAAP net income over the last four quarters and has a mountain of cash at its disposal. Its bear market status cannot be a simple story about higher interest rates making distant earnings less attractive. With the possible exception of Netflix, which saw subscriber declines last quarter in an increasingly competitive streaming video market, the drop in FAANG names and healthy businesses in other industries signals a new phase of market sell-off. . “These stocks are very important. They were the last to go,” Ritholtz Wealth Management CEO Josh Brown said on Wednesday’s “Closing Bell: Overtime.” “It doesn’t mean that something is wrong with these companies. It means that something is substantially wrong with the market.” The state of the bear market has made those stocks potentially big winners whenever the market rallies, according to Wall Street analysts. Outside of Netflix, each of the Big Tech stocks listed above is rated buy by more than half of Wall Street analysts. And, with the exception of Amazon, all stocks are trading at forward price-to-earnings well below their December levels. Furthermore, Apple succumbing to selling pressure could be a sign that investors are finally capitulating and that the bottom of the market could be on the horizon, albeit a distant one. “Our guess is that the AAPL sell-off will continue, not because we know anything about iPhone shipments or service revenue this quarter, but because we believe that once investors start selling top names, they rarely do so at all.” one day,” wrote Nick Colas. , co-founder of DataTrek Research. “The only good news, however little, is that this is the signal we’ve been waiting for in terms of the beginning of a tailwind for US/global equities.” The S&P 500 is also now teetering near a bear market, down 18.3% from its closing all-time high on Wednesday. Brown said the market may need a full day of washout, removing the energy and defensive stocks that have kept the S&P 500 afloat, to find a bottom. “I really feel like, listening to veterans, guys who’ve seen this many times like Art Cashin, that need for a real wash day, circuit breakers and all, might be just what the doctor ordered,” Brown said. . However, he did note that there were some signs that the market decline was coming to an end, such as a recent rally in US Treasuries. “Is this the end? I don’t know. I think there’s a lot less risk to start shopping here than two weeks ago,” Brown said.
Customers walk past an Apple logo inside an Apple store in Grand Central Station in New York.
lucas jackson | Reuters
The market sell-off finally captured the last Big Tech hold, and now investors will wait to see if that was the final straw before a rebound.