Yesterday saw markets tumble across the globe, with tech stocks, in particular, having a very hard time of it. Multiple market leaders, including Google (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN), closed down for the day as the market underwent a large-scale selloff.
The Nasdaq fell 1.6%, the S&P 500 (NYSEARCA: VOO) fell 1.9%, and most companies were simply resigned to the same fate. Apple (NASDAQ: AAPL), however, bucked this trend and managed to close the day with a 3.1% gain? Just how did it manage to do this when all signs pointed towards a downturn for the entire industry?
Why did markets fall?
The first reason should come as no real surprise. Fears surrounding the Omicron variant of COVID-19 have sent the markets into a panic. Since news of the variant broke on Friday the markets have been exceptionally volatile. Further bad news this week from pharmaceutical companies such as Moderna and Regeneron about decreased vaccine effectiveness for the new variant only served to sink the markets further.
In the midst of this fear and uncertainty, any news at all can lead to reactionary moves from investors. Despite zero confirmed cases of Omicron on U.S. soil, speculation is rife that it’s only a matter of time. Any such announcement could lead to even further stock dumping.
The second reason behind the plunging market comes from comments made by U.S. Federal Reserve Chairman Jerome Powell. The Chairman stated that the central bank is accelerating plans to stop bond purchases earlier than expected. This opens the door for short-term raises in interest rates in a bid to halt soaring inflation.
These money tightening attempts were met with trepidation by investors, who responded by commencing a large selloff. Higher interest rates typically hurt stock prices across the market, but they especially impact more expensive stocks and those primed for a large profit. As such, it’s no wonder that some of the biggest tech stocks saw declines yesterday
Why did Apple Stock rise?
So how did Apple manage to navigate all of this and come out the other side with more than a three percent gain? The answer seems to lie in Apple’s unrivaled cash flow. Apple can use this to its advantage to hold firm through any economic slowdown and take advantage of prices as they fall.
Hype is also strong around the Cupertino company right now, as reports have recently emerged around new products such as an augmented reality headset and the very secretive Apple car. Apple hasn’t brought out an entirely new product in five years, so news of impending releases has investors bullish even in the middle of widespread bearish sentiments.
Apple also maintains a stellar financial record aside from its enormous cash flow, with record revenue predicted for the holiday quarter. All this added up to Apple not only surviving yesterday’s downturn but beating it entirely.
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Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.