Markets were bifurcated as the Dow was unchanged and the NASDAQ led by be technology shares retreated about 1.0% amid concern over how a Chinese ban on AAPL’s iPhone could impact other segments of the technology industry. Apple, the technology behemoth, has shed about $200 billion in market cap in two days according to Bloomberg.
The amount Apple shares have declined is more than the value of NFLX and about the same capitalization of McDonalds. Writing it differently, AAPL lost more capitalization than the net worth of 468 members of the S & P 500.
Markets were also spooked by jobless claims which fell to the lowest level since February, adding to evidence of a resilient labor market in the face of a very aggressive Fed. Claims were lower than all forecasts in a Bloomberg survey of economists.
A major issue at hand is that everyone already owns the 5-7 mega sized technology firms and when selling starts who is left to buy the shares. Recently AAPL and MSFT were worth an incredible 8% and 7% of the S & P 500, respectively.
There has never been a concentration of monies in several companies or one sector. It has created a very imbalanced market.
The Treasury market initially sold off on the jobless claims but later retraced most of the drop, perhaps believing jobless claims may have been distorted by Hurricane Idalia. The rebound in prices did not lend to a rally for the technology sector.
What will happen today?
Last night the foreign markets were down. London was down 0.07%, Paris down 0.01% and Frankfurt down 0.28%.. China was down 0.,18% Japan down 1.16% and Hang Seng closed.
Futures are bifurcated as Dow futures are flat and NASDAQ futures down 0.40%. The 10-year is off 2/32 to yield 4.26%.
