Apple's China Woes Shake Markets, Energy Sector Thrives Amidst Volatility
Apple's China Woes Shake Markets, Energy Sector Thrives Amidst Volatility
By:JJ Kinahan
While Disney's downturn continues and the CPI report looms
- Apple's China troubles affect stocks, while energy sector surges and all eyes are on the upcoming CPI report.
- Disney struggles persist. Energy stocks gain momentum and market volatility remains surprisingly low amid challenges.
- Support levels shift, with 4410 in focus; market awaits CPI report for potential direction change.
In this market update, we'll explore the recent developments that have been impacting stocks, from Apple's (AAPL) decline to the resilience of the energy sector and look ahead to the upcoming Consumer Price Index (CPI) report.
On Thursday, markets displayed weakness once again, with the S&P 500 dropping 0.3% and the Nasdaq Composite falling 0.9%. Investors are currently caught in a sort of limbo as they await the release of next week's CPI report, which could potentially provide clarity on the market's direction.
Apple declines
One of the standout stories of the week has been the decline in Apple's stock. This drop was triggered by a Chinese government order prohibiting state workers from using foreign-made phones, including iPhones. As a result, Apple's shares suffered a 2.9% loss in a single day and have shed $190 billion in market capitalization in just two days.
To put this into perspective, Apple owned a substantial 65% share of the Chinese market for mobile phones priced above $600, and China accounted for 24% of all iPhone shipments in the second quarter, surpassing the United States' 21%. The ban on state employees could potentially influence Chinese consumers, posing a significant threat to Apple's largest market.
Disney (DIS), too, faced challenges this week, with its shares closing at their lowest level since 2014. Investors were optimistic for the company's turnaround under the leadership of Bob Iger, but Disney continues to struggle, with a slight decline of just over 1% for the week.
Energy sees an upswing
In contrast to tech giants like Apple, the energy sector has been on a notable upswing. It emerged as the strongest-performing sector in the S&P 500, gaining 1.3% and rising by 18% from its late June lows. This sector has been bustling with activity, particularly as crude oil prices have experienced significant surges. Investors at tastytrade have been actively involved in both listed and futures products linked to the energy sector.
Looking ahead, next week promises a significant economic update with the release of the CPI. Analysts anticipate a month-over-month increase of 0.5% and a 0.2% month-over-month increase for core CPI. This report is especially crucial because it may provide the catalyst needed to break the current market stagnation. The markets are eagerly awaiting this data point to gain some clarity.
Previously, market technicians were eyeing the 4460 level in the S&P 500 as a crucial support level. However, the market has dipped below that level, leaving analysts to wonder if what was once support may now become resistance. The current focus has shifted to finding support at 4410.
Despite the challenges faced by some prominent companies this week, market volatility, as measured by the VIX, remains below 15, which is significantly lower than its historical average. This lack of panic amid recent tech sector weakness is noteworthy, and it suggests a level of resilience in the market.
In conclusion, the markets are currently navigating a mix of challenges and opportunities, with tech giants like Apple facing headwinds while the energy sector surges ahead. As the CPI report looms on the horizon, investors are poised for potential market movements. In times of uncertainty, it's advisable to adhere to your investment plans and long-term objectives.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.