By Dan Eduard – With the release of the iPhone 4 dominating headlines, it may be a good time to take a look at how the popular device may be impacting the U.S. stock markets. Most of the press surrounding the iPhone 4 more or less reads the same. Talk of 1.7 million units being sold in only three days and of how Apple is now expanding the number of companies it will distribute the iPhone with, might lead spectators to certain assumptions.
If the iPhone is such a hot product, shouldn’t Apple’s stock be rising in value? Furthermore, shouldn’t the Nasdaq 100, where Apple trades, also be moving up? Investors may be surprised at the answers to both questions.
Apple’s shares on the Nasdaq 100 are down over 2% for the month of June. This is despite the seemingly endless demand for the iPhone. In addition, Apple recently announced that starting in January, Verizon will be able to sell the iPhone along with AT&T.
So how do we explain the drop in the stock market? It appears that Wall Street is waiting to see how well Verizon is able to market the iPhone ahead of its January release date. Furthermore, a perceived over saturation in the market may be causing investors to hesitate regarding the long-term success of the latest Apple product.
While we have explained the drop in Apple’s stock, how should we interpret the drop in the Nasdaq? After all, Apple is only one of 100 companies trading on this specific exchange. As seen in the chart below, the Nasdaq has entered a downward trend that began around June 21st. In order to understand this phenomenon, it is helpful to take a look at recent developments surrounding the iPhone 4.
Demand for the iPhone has been so high, that customers appear to be abandoning its competitor, the Blackberry. Blackberry is owned by Research in Motion, a company which recently saw its stock drop a shocking 4% in a single afternoon. It just so happens, that Research in Motion also trades on the Nasdaq 100. This could go a long way in explaining the Nasdaq’s recent bearish trend.
So to answer our original question: Is the release of the iPhone 4 causing the Nasdaq to fall? Most likely it is a contributing factor, although in no way the only one. Indices like the S&P 500 and Dow Jones Industrials have also bearish trends in recent days. That being said, when a product such as the iPhone is introduced into the market place, its impact can be felt in many different ways.
What do you think? Can a single product impact the stock market?
Nasdaq 100
Forex Market Analysis provided by Forex Yard.
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