Apple (and the rest) bounce back on Joe Biden’s win

After Super Tuesday’s $9.49 loss, Apple closed up $13.42 (4.64%) for the day.

From “Wall Street rebounds to close 4% higher” posted Wednesday by the Financial Times:

apple bounces back bidenUS stocks rose more than 4 per cent on Wednesday as investors cheered Joe Biden’s strong showing in the Democratic primaries and US lawmakers proposed an $8bn deal to fund a response to the coronavirus outbreak.

The S&P 500 extended earlier gains after the House of Representatives announced a vote on a spending package to help limit the spread of the virus. Investors have also welcomed signs of a more co-ordinated policy response by governments and central banks around the world…

The gains for US stocks on Wednesday come after one of the most dramatic periods of trading on Wall Street since the financial crisis. On Tuesday stocks sold off after the Federal Reserve’s shock decision to cut interest rates by half a percentage point, having posted one of the best days in the last decade on Monday. Last week saw heavy selling due to fears of the spread of the coronavirus.

My take: Volatility, thy name is Apple.

4 Comments

  1. Gregg Thurman said:
    signs of a more co-ordinated policy response by governments and central banks around the world…

    Here’s hoping that’s true.

    1
    March 4, 2020
  2. David Emery said:
    Hmmm… (1) AAPL shares continue to be removed by Apple buy-backs. (2) institutional ownership in AAPL was, at least until recently, substantially reduced. So does this imply (3) a lot of shares bouncing back-and-forth between speculators?

    I accept the argument previously that AAPL volatility is at least in part due to automated trading. I’m just wondering if we’re seeing the same dozen shares changing hands multiple times each day 🙂

    0
    March 4, 2020
  3. Jerry Doyle said:
    Markets are in a state of volatility, if not a state of frenzy. One day up, next day down, depending on mostly whatever the news cycle is for that day. Today it was WS’s jubilation over a Biden’s strong political performance in Super Tuesday with a mid-day push farther up over the news that the House passed an $8.3B emergency aid package plan to target Covid-19 response efforts.

    I believe firmly the upward market trajectory today is short-lived. Covid-19 is going to spread. The strategy for dealing with Covid-19 is quick response on containment of the virus to a specific geographic area, or worse, to a geographic region.

    I personally do not believe that a successful response by health officials will keep the markets from testing new lows in the coming days, weeks and possibly months. There will be parts of the country where communities and cities have instituted quarantines, declared emergency civil order and instituted other measures that will disrupt the economy.

    What we are dealing with more than Covid-19, is “public fear.” That human fear factor is all powerful providing an antidote for people to isolate themselves from others. The economy suffers and the markets react accordingly.

    The virus is going to spread, creating economic havoc. We all know Apple will trot upwards to $400 plus once the virus is behind us. I am poised with dry powder in my brokerage account to enter hopefully, at a propitious time to scoop up additional Apple shares at bargain basement prices.

    2
    March 4, 2020
    • Fred Stein said:
      All good points. I’d like to add.

      Stocks and other assets are priced with a very low risk premium. Almost no one really does the DCF math. Rather it’s in the collective group think. Then we have the positive feedback mechanism of wealth effect. Once Covid-19, or some other factor, shakes the low risk premium, it lowers asset prices, the wealth effect loses its efficacy.

      This is not a doomsday scenario, just a correction.

      AAPL comes out of this as a safety stock.

      1
      March 4, 2020

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