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“If my answers frighten you, then you should cease asking scary questions.” – Jules Winnfield, Pulp Fiction
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After three straight days of losses for the S&P 500, futures are higher this morning along with gold and bitcoin while oil and treasury yields are modestly lower. There’s no economic data on the calendar, and the only earnings reports of note are from Carnival (CCL), Cintas (CTAS), and Unifirst (UNF). CTAS and UNF are both in similar industries (uniform rentals for staff) but reported different results. While CTAS reported better-than-expected EPS and raised guidance, UNF missed forecasts and lowered guidance.
Can the market rally without Apple? For years you’ve heard this question asked within broader market conversations. It’s been especially the case in more recent years as Apple (AAPL) has been the largest company in the world and at one point last year even accounted for over 7% of the entire S&P 500. Just as the question has been asked, though, the market has answered. Over the last 200 trading days, the S&P 500 is up 21%, and during that time, shares of AAPL have dropped over 6%. As shown below, the 27.2 percentage point performance gap between the two ranks as the widest since October 2013. Looking over even a shorter time frame, over the last 100 trading days, the S&P 500 is up over 24% while AAPL is down fractionally. In the entire period since the iPod was first launched in late 2001, this current period is the first time that the S&P 500 has been up 20% or more over a 100-trading day period while AAPL was down.
The chart below compares the performance of AAPL over a 200-trading day period (x-axis) to the performance of the S&P 500 over that same span (y-axis) for all periods since 2002. The shaded area represents periods where the S&P 500 was up 20% or more, and during those, AAPL’s median performance was a gain of 43% compared to the current period’s decline of 6%. More broadly, in the 715 trading days since the start of 2002 when the S&P 500’s trailing 200-day performance was over 20%, shares of AAPL were also higher 94% of the time. Looking at it from the reverse perspective, in all periods since 2002 when AAPL was down over a 200-trading day period, the S&P 500’s median performance during that same span was a decline of 9.3% with gains less than 32% of the time. In other words, the market can rally without AAPL, but it usually doesn’t.
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