Apple Falls Below Its 200-Day Moving Average for First Time Since 2013

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Why Apple Has Fallen Since February Peak

The bull market’s base just lost another brick.

To the collapse in breadth and falling earnings, add a correction in Apple Inc. to the list of concerns facing investors. The iPhone maker has slipped 13 percent since hitting an all-time high in February, entering correction territory on Monday and dropping below another chart threshold, its 200-day moving average, for the first time since 2013.

It’s good news for neither Apple bulls nor the larger market, where the stock makes up 3.7 percent of the Standard & Poor’s 500 Index and 13 percent of the Nasdaq 100 Index. Shares of the Cupertino, California-based company have fallen 10 of the last 11 days.

“Any time you get that type of a market leader with that big of a following, it is disconcerting to see it break trend,” said Peter Sorrentino, a Cincinnati-based fund manager at Huntington Asset Advisors Inc., which oversees $1.8 billion including Apple shares. “It is a popular stock and it had to lose speed, but for the broader market it makes one wonder if we are staring down a price correction.”

Latest Blow

Apple fell 1.8 percent to $116.27, a six-month low, at 9:55 a.m. in New York. The S&P 500 was little changed at 2,099.05.

The iPhone maker’s shares had spent 471 sessions above the 200-day threshold, last falling below it in September 2013. It entered a correction territory today after coming within 40 cents of one on July 9 before rallying.

Apple’s latest decline is another blow to U.S. equities, which have struggled to break out of a 90-point range since February as market leadership has thinned. Apple’s stock has been responsible for more of the S&P 500’s bull market gains than any other stock, with its 10-fold increase accounting for 5.3 percent of the run since March 2009.

The last time Apple slipped more than 10 percent was in December during a decline that lasted 13 days. The S&P 500 dropped 4.8 percent over the stretch before rallying to fresh records at the end of the month.

Apple’s latest drop began on July 21, as the stock recorded its steepest post-earnings tumble since January 2013 after disappointing iPhone sales rekindled concerns over whether the company can keep making must-have products. While Chief Executive Officer Tim Cook has succeeded in introducing an entirely new category with the Apple Watch, sales remain modest, indicating that Apple will have to keep relying on the iPhone to fuel growth.

Losses in Chinese equities, where almost $4 trillion was erased from June to July, may leave consumers with less money to buy gadgets in a market Cook expects to become Apple’s biggest. Apple got 17.4 percent of its revenue from China in its last full-year reporting period, Bloomberg data show.

Punished Companies

For a large stock such as Apple breaking down, “it would give any investors a cause of concern,” said Albert Brenner, who helps manage $5.6 billion as director of asset allocation strategy at People’s United Bank Wealth Management in Bridgeport, Connecticut.

At the same time, “the market has held up while Apple is trading down,” he said. “Investors have to come to terms with if it reflects a change in either market sentiment or company fundamentals, or both.”

This earnings season has been less than an overwhelming success for S&P 500 technology firms, ravaged by a strong U.S. dollar and the decline in personal-computer demand. They’ve beaten analysts’ earnings estimates at a 71 percent pace so far in the season, data compiled by Bloomberg show. The rate is lower than for the entire S&P 500 -- at 74 percent -- with notable misses including Yahoo! Inc. and Oracle Corp.

Technology companies whose results impressed investors have carried the S&P 500 to a 2.5 percent gain since its earnings season unofficially began July 8. Amazon.com Inc., Google Inc. and Netflix Inc. have jumped more than 22 percent since then.

In the Nasdaq 100, companies have swung up or down an average of more than 5 percent immediately after reporting results in the past three weeks, the highest since 2012, data compiled by Bloomberg show. Those that disappointed investors tumbled 4.8 percent while those pleasing them gained 5.3 percent, according to data through the end of last week.

Apple “has had an incredible run over the last several years and the earnings were mildly disappointing to some people, so there were some extreme momentum players that used that as an excuse to lighten up,” said Marshall Front, the Chicago-based chief investment officer at Front Barnett Associates LLC. “We’ve been in a correction of sorts so it’s not surprising that even the strongest companies with the brightest prospects can get nixed.”

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