The US stock market has been in the red since the start of 2024 and Apple (NASDAQ: AAPL) should be among the first to blame.
Notably, the tech giant is facing a challenging start to the year, with its shares down over 3% amid a downgrade from Barclays analysts. The downgrade, citing growth concerns, has shifted the stock’s rating to underweight, and the price target has been marginally reduced from $161 to $160. The move was mimicked by Piper Sandler analysts during the same week.
The primary factor behind this reduction is the perceived “lackluster” sales of the iPhone 15, particularly in the crucial Chinese market. Analysts anticipate a continuation of this trend with the iPhone 16, signaling broader concerns about Apple’s hardware sales.
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The company’s key smartphone business has been showing signs of a slowdown for a while now, with sales declining in each of the past four fiscal quarters.
In the wake of the share price decline, AAPL is now hovering above a critical support level. Losing this ground could lead to a significant pullback not just in Apple’s shares but also in the broader market.
Apple stock ‘facing a big test’
As Barchart highlighted in its January 7 post, Apple’s shares are currently “facing a big test.”
To be more specific, the stock is trading at $181.18, just above the 200-day moving average (MA) at $180.02, which acts as a major support level. AAPL already dropped below the 100-day MA at $182.37 last week.
Losing this ground would allow the bears to send Apple’s stock tumbling toward the next support area between $173.5 and $171.9.
A potential pullback in Apple’s shares, wiping out billions from its market capitalization, could have far-reaching implications for the broader market.
As the largest stock globally, Apple holds significant weight in major stock indexes such as the S&P 500 and Nasdaq. Given its substantial representation, a deeper nosedive in Apple shares is poised to cascade across the wider market, pushing it further into negative territory.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
