The world’s largest company, which was recently valued at $1.4 trillion after the release of its last earnings report, cautioned investors and shareholders that its earnings for the current quarter could suffer from the spread of the novel coronavirus.
Apple Executives’ fears are caused by the limited productivity in China, which, in turn, is the result of the government’s attempt to curb the spread of the virus, which was dubbed COVID-19.
Chiefly, Apple might fail to meet its customers’ demand over the next three months because of the greatly lessened production of microchips by its partner-company Foxconn in China, which is currently operating at around 10 per cent capacity.
The company warned again such distortions in supply, which are likely to prompt additional concerns on Wall Street, as investors struggle to quantify the adverse impact that the spread of the virus is currently having on the global stock market.
These new earnings concerns have prompted a fall in Apple’s stock, which is currently threading below the S&P 500. Even though this surprising depreciation is likely to be promptly corrected, it demonstrates the vulnerability of the Tech industry to the coronavirus.
Tech stocks were the best performers in the last earnings season, which means that if the situation in China continues to worsen, even the most robust aspects of the global economy are going to be hit, with unknown consequences.
Apple vs S&P 500. Image source: Trendsharks ©, created with TradingView.com
Apple's share price opened yesterday's trading session with an almost 10 per cent gap; however, it was then able to make up for some of the losses by edging higher by the end of the trading day.
It seems to have found strong support at 317.06, despite having closed just below the lower boundary of the regression channel. Moreover, it is worth mentioning that the Average Directional Index (ADX) fell for the first time below 25 points since 15th October 2019.
This indicates that the current bullish trend is losing its strength at the fastest pace in over three months, even though it remains prevailing. It is yet to be seen whether the expected cutbacks in the overall supply of iPhones is going to bolster the rate of reduction of the bullish trend’s power.
Apple 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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