Apple triggers broad sell-off - Creand
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Apple triggers broad sell-off

The stock market registered broad-based losses on this holiday-shortened week. The week featured below-average volume as investors remained in vacation mode after Labor Day weekend. This made it easy for a decline in the shares of Apple (AAPL), along with a rise in the price of crude oil, and rising interest rates to drag the market lower. 

Only two of the S&P 500 sectors logged a gain with energy gaining 1.4% and utilities up 0.3%. The industrials (-2.9%), technology (-2.3%), and materials (-2.5%) sectors all declined by more than 2.0%.

Apple (AAPL) declined 6.0% this week following reports on Wednesday that China banned government officials from using Apple devices, according to The Wall Street Journal.  Apple was hit again on Thursday following a Bloomberg report that China is aiming to broaden its iPhone ban to state and federal agencies. The news on Apple sent semiconductor stocks lower as well, leading to a 2.0% loss in the PHLX Semiconductor Index.

The sharp increase in oil prices prompted worries about inflation expectations and consumer spending pressures. That understanding contributed to this week’s stock sell off. WTI crude oil futures jumped $1.92, or 2.2%, to $87.47/bbl. That move follows news that Saudi Arabia and Russia are planning to extend their voluntary oil production cuts of 1 million barrels per day and 300,000 barrels per day, respectively, through the end of 2023.

Treasury yields climbed this week as market participants reacted to a slate of economic data. The 2-yr note yield rose nine basis points to 4.97% and the 10-yr note yield rose nine basis points to 4.26%. 

The ISM Services PMI showed that services sector activity accelerated in August but prices also increased at a faster pace. Initial jobless claims for the week ending September 2 were just 216,000, its lowest since February. Additionally, productivity for the second quarter was revised lower (to 3.5% from 3.7%) while unit labor costs were revised higher (to 2.2% from 1.6%).

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Charles Castillo
Senior Portfolio Manager. Creand Wealth Management