Apple shares fell over 3% on Monday after a closely watched analyst warned that the demand for the iPhone 16 Pro has been lower than expected. The drop in Apple stock contributed to a slight loss for the S&P 500, primarily due to weakness in the tech behemoths that dominate the US equity benchmark. Meanwhile, the S&P 500’s equal-weighted version hovered near its all-time high amid hopes this year’s rally will broaden out.
Banks vastly outperformed the broader market as a top analyst said prospects for a soft economic landing should trump margin pressures. The Nasdaq 100 slid 1.1%, while the Dow Jones Industrial Average rose 0.2%. The Bloomberg “Magnificent Seven” gauge of megacaps sank 1.4%.
The Russell 2000 of small firms changed little—technology giants like Nvidia Corp. and Microsoft Corp.
have led gains in equities for much of the last two years, with investors attracted to their booming profits and exposure to artificial intelligence. However, since the S&P 500 peaked on July 16, the so-called Magnificent Seven have mostly slumped, with the cohort of tech megacaps falling over 6%. Meanwhile, other industries gained traction.
Apple stocks dip amid weak demand
Hedge funds are back to buying big technology stocks, according to a recent Morgan Stanley prime brokerage report. Conversely, defensive sectors have been net sold as the funds trimmed their exposure across real estate, health care, and utilities.
As the Fed prepares to cut rates, top Wall Street strategists say the size of the central bank’s reduction is less relevant for equities than the health of the US economy. Goldman Sachs Group Inc. strategists argue that the outlook for economic growth is a more important driver than the speed of rate cuts alone.
In corporate news, Intel Corp. has qualified for as much as $3.5 billion in federal grants to make semiconductors for the Pentagon, following a binding agreement with US officials. Boeing Co.
announced a range of cost-cutting measures as it prepares for a potentially prolonged and costly strike by workers at its main hub near Seattle, including a hiring freeze and temporary furloughs. On the technical side, Apple shares have become range-bound within the context of its primary uptrend. The stock has registered its first MACD ‘sell’ signal since January on the weekly bar chart, reflecting a notable loss of intermediate-term momentum.
This suggests that Apple has entered a corrective period that could extend for several weeks. As Apple is the largest component of the S&P 500, comprising nearly 7% of its weighting, a corrective phase in the stock would likely be a drag on the major indices, which are already facing a weak seasonal period in September and October.
