Weakness in the broader market
In the week ended May 17, the broader market continued to be in the red for the second week in a row. The S&P 500 Index, the NASDAQ Composite Index, and the Dow Jones Industrial Average fell by 0.8%, 1.3%, and 0.7%, respectively, last week. Concern about the escalating US-China trade war was one of the key factors that hurt investors’ sentiments. Meanwhile, Apple (AAPL) ended last week with 4.1% losses after falling by 6.9% in the previous week. Let’s look at some of the main factors that drove the iPhone maker’s stock down.
Trade war threats
Apple is one of the most sensitive US companies to the ongoing US-China trade spat. Last week, the US-China trade war took an ugly turn as China retaliated against President Donald Trump’s move to increase tariffs on Chinese imports worth $200 billion. In retaliation, China decided to raise tariffs on American imports worth $60 billion, effective from June 1.
Wedbush Securities analysts Daniel Ives and Strecker Backe believe that “the cost of making iPhones could increase by 2% to 3% as a result of the tariffs,” Business Insider reported.
The Supreme Court ruling against Apple
In another blow to Apple, the Supreme Court allowed “a lawsuit by consumers accusing Apple Inc of monopolizing the market for iPhone software applications and forcing them to overpay,” Reuters reported.
These negative factors could continue to hurt Apple investors’ sentiments, which could result in further losses in Apple stock this week. On May 20, at 7:25 AM EST, Apple stock was trading with 2.3% losses in the premarket session.
The ongoing US-China trade war is also taking a toll on semiconductor stocks. Last week, NVIDIA (NVDA) fell by 7.3% despite its better-than-expected earnings on May 16. NVIDIA’s dismal business outlook partly due to the escalating trade tensions kept investors pessimistic.