Apple stock market investors look for signs worst is over after $300bn slump

With Apple’s shares coming off their poorest quarterly performance relative to the main US stock market index — the S&P 500 Index — in over a decade, traders are looking for signs that the worst may be over.

The 12% drop since the start of the year paid off for short sellers, giving them an incentive to unwind their bets. Technical analysts say the stock is flirting with levels where dip-buyers are likely to swoop in. And the lagging run may make Apple look cheap compared with the other big tech companies.

“Nobody wants to sell anymore of their Apple positions because there’s a dividend, big share buybacks and no one wants to pay capital-gains taxes on it,” said Craig Johnson, chief market technician at Piper Sandler.

“I don’t see the stock falling much further from here. The bigger risk is that Apple’s stock may be stuck in a range between $165 to $200 until it can decisively break above its longer-term moving averages,” Mr Johnson said. Apple shares fell about 1% at one stage in the latest trading session.

The slide has erased more than $300bn (€279bn) in stock market value this year, ceding Apple’s status as the most valuable US company to Microsoft. The drop was spurred by declining sales in China, regulatory scrutiny of its App store, and mounting concern among investors about its growth outlook.

As the S&P 500 gained, Apple’s return lagged it by 21 percentage points in the first quarter, the worst showing by that measure since 2013, according to data compiled by Bloomberg.

But the loss has been steep enough that it’s nearing a key support level at $165, the low it hit in October, when the broader market also bottomed out.

Short sellers pounced on Apple as peers like Nvidia, Meta, and Amazon, kept rallying. Apple is the second-most profitable short position this year at $2.4bn in paper profits, according to data-analytics firm S3 Partners.

That may give them some incentive to unwind the positions, and while the size of open short positions hasn’t changed much, they’re down from levels seen last year.

With Apple faltering, traders are growing concerned that tech shares may face pressure in the coming months — even with Nvidia’s dominance. That suggests a momentum divergence has formed in the tech sector versus the broader market.

That said, Apple traditionally serves as a flight-to-safety trade due to its strong business model and cash generation. Irish Examiner