Fed hike sends stocks down! Up! Way down! -- Apple more than most

"You can only steer the ship towards the storm for so long" -- Charlie Ripley

From CNBC's "Dow closes 500 points lower after the Fed delivers another aggressive rate hike" posted Wednesday:

Stocks fell in volatile trading Wednesday after the Federal Reserve raised rates by three-quarters of a point and forecast more sizable rate hikes in its fight against inflation, actions widely expected by traders.

The Fed raised rates by 0.75 percentage point, or 75 basis points, as was widely expected, and said it expects its so-called terminal rate to reach 4.6% to fight persistently high U.S. inflation. That’s the rate at which the central bank will end its tightening regime. The central bank also indicated that it plans to stay aggressive, hiking rates to 4.4% by next year.

“You can only steer the ship towards the storm for so long, but eventually there comes a time when you need to batten down the hatches and with the Fed’s third consecutive 75 basis point rate hike over the past four months, market participants should be looking for cover to weather the upcoming storm,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

My take: The S&P 500 ended the day down 1.27%, Apple was down 2.03%.

10 Comments

  1. Hap Allen said:
    I would say our ship is more seaworthy than most.

    4
    September 21, 2022
  2. Rodney Avilla said:
    3 points to ponder.
    1. Apple’s bonds are fixed rate. They don’t change with the interest rates.
    2. Apple doesn’t need to borrow to operate. It only borrows to lower its tax burden
    3. People can buy Apple products at 0% for 2 years, again not affected by fed’s hike

    Higher rates should not hurt Apple (much) on either side of the isle.

    1
    September 21, 2022
    • John Konopka said:
      Considering that Apple chose not to raise US prices that amounts to a price cut in inflation adjusted dollars for the iPhone 14. I can’t imagine that Apple will raise prices until the iPhone 15 comes out, unless something dramatic happens and inflation strengthens quite a bit. This makes the iPhone 14 cheaper month-by-month.

      Who knows how they calculate this? I’d imagine most of their costs are overseas so maybe the strong dollar is offsetting inflation? Also, as the economy weakens component prices may be going down. There was a report the other day about DRAM exports from S Korea slowing quite a bit. Presumably that implies lower prices as well.

      1
      September 22, 2022

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