Apple (NASDAQ:AAPL) share price regains $2 trillion market cap

Apple Inc (NASDAQ: AAPL) is once again the world’s first publicly listed US$2 trillion company despite a share price fall.

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ASX share price represented by giant apple having fallen from an apple tree

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Apple Inc (NASDAQ: AAPL) is once again the world’s first publicly listed US$2 trillion company. After the Apple share price fell 4% two days ago, its market capitalisation has recovered to bring it back over the milestone level.

Let’s take a closer look at what’s been happening with the iOS developer’s share price over the last few days.

Apple share price rises and falls on investor anxiety

Both the tech-heavy Nasdaq Composite and the S&P/ASX All Technology Index (ASX: XTX) have taken a beating over the last month. Yesterday the Nasdaq officially entered a correction – that’s when a share market or index falls by 10% or more.

The fall saw billions wiped off the value of Apple, as well as companies like Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), and Tesla Inc (NASDAQ: TSLA).

The fall in share price is the reason Apple briefly lost its $2 trillion valuation.

Why, though, were tech companies falling in the first place?

In one word, inflation.

Investors are worried the passage of the US$1.9 trillion stimulus bill through Congress, plus the market entering a “post-COVID” phase, will see inflation rise. Rising inflation usually equates to a higher interest rate. A higher interest rate makes bonds a more lucrative asset. US bonds are widely regarded as the safest investment – as the US has never defaulted on its debts.

Investors then sell riskier prospects (like Apple shares) to fund bond purchases. In the US, we’ve seen the share price of the aforementioned companies fall. Australia has also not been immune.

Take for example Afterpay Ltd (ASX: APT). As of writing, the Afterpay share price is sitting at $108.51. One month ago it was at $154.81 so we are now seeing nearly a 30% drop in just four weeks.

According to some, however, the market is out of step with policy makers. US Treasury Secretary Janet Yellen and RBA Governor Phillip Lowe have both stated that inflation is not a short- or medium-term worry.

That message may finally be reaching investors’ ears, enough to bring back the magic $2 trillion valuation for Apple.

And yet, the Apple share price was still edging lower last night (Aussie time). As of Wednesday’s close, shares in the tech giant were trading at US$119.98. That’s down 0.91% on Tuesday’s close. In comparison, the Nasdaq composite was down 0.58%.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and recommends the following options: short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, long March 2023 $120 calls on Apple, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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