Apple rose for the 11th straight day in New York to close at $178.96, about $3 lower than its January record high.
Apple Inc. extended its gains on Tuesday, on a winning streak last seen nearly two decades ago, as improving risk sentiment is sending investors back to the biggest US tech companies.
Apple rose for the 11th day in a row in New York, rising 1.9% to close at $178.96 and about $3 less than the closing record reached in early January. The longest winning streak since 2003 sent stocks back into the green for the year, and follows similar breakouts at Nvidia Corp. and Amazon.com Inc. last week.
“What we’re seeing is the difference between companies that are actually doing phenomenally well and those whose future is harder to quantify,” said Ross Gerber, CEO of Gerber Kawasaki Inc. “People are betting on companies that they are increasing their profits. fastest in time.”
With the prospect of some de-escalation from the war in Ukraine boosting risk sentiment, attention turned to Apple’s earnings outlook. Analysts have raised their estimates for earnings per share 8.6% so far this year, while those for the S&P 500 have gained 4.6%, according to data compiled by Bloomberg.
Investors also largely overlooked a Nikkei report on production cuts, leaving the stock within striking distance of a $3 trillion market value.
The recent rally comes after a rocky start to the year for big tech, whose big names had lagged behind the broader market as the Federal Reserve signaled it would raise interest rates multiple times. Higher interest rates hurt the present value of future earnings, hurting highly valued growth stocks, including technology.
But investors who initially fled the sector have begun to return, lured by discounts and a belief that big tech companies with strong balance sheets and ample exposure to fast-growing markets like cloud computing can continue to deliver higher profits.
“The selloff went overboard and took these big tech names to levels that were very attractive,” said David Katz, chief investment officer at Matrix Asset Advisors. “Apple is a very strong and dynamic growth company and remains at the top end of the pack in terms of valuation.”
Among other Nasdaq 100 indicators, Amazon rose 0.2% on Tuesday, while Alphabet Inc. advanced 0.7% and Microsoft Corp. gained 1.5%. Despite this week’s rally, the Nasdaq 100 is still down 7% on the year.
The rally in big tech amid rising interest rates has left some investors scratching their heads. The 10-year US Treasury bond yield has advanced more than 50 basis points this month to 2.39%.
Lisa Shalett, chief investment officer of Wealth Management at Morgan Stanley, wrote that the move in the Nasdaq 100, with its heavy teaching content, has been “confusing” as it comes at a time of higher interest rates as the Fed takes action to combat inflation.
For Bill Stone, chief investment officer at Glenview Trust Co., the big tech rally is a matter of investors looking to add to portfolios after liquidation and looking for stocks with the highest returns on equity and low amounts of debt.
“People go shopping and they are certainly the ones people will look at first,” he said. “We have been telling customers to move to quality in case we go into a recession. “Companies with little debt and high returns on equity will not suffer as much.”
(Updates with closing prices everywhere).
–With the assistance of Thyagaraju Adinarayan and Phil Serafino.