The market could lose one of its leading figures as it prepares to release key inflation reports that will clarify the future direction of monetary policy. Next Wednesday, August’s consumer prices report will be released at 8:30 am ET. ET. Apple’s stock price dropped this week after reports surfaced that China is planning to extend a ban against the use of iPhones by government agencies and companies owned by the state. Apple, the iconic smart phone manufacturer, has gained more than 37% in this year but is down by about 10% from its highs of July. It lost almost 6% this week, dropping below its 50-day average. Investors feared that the biggest tech stock in the S & P 500 Index, the mega-captech stock, could be about to break – a negative signal for the broader markets. Rob Ginsberg is the managing director of Wolfe Research. He believes that the large cap names are beginning to feel the impact of the weakened momentum below the surface. The major benchmarks also had a negative week on Friday. The Dow Jones Industrial Average fell 0.8% this week. The S & P 500 dropped 1.3%, and the Nasdaq composite was down 1.9%. Apple’s September product event “Wonderlust” is scheduled to take place next week. It is widely expected to reveal the iPhone 15 at this event. The company, led by CEO Tim Cook, has a market capitalization of nearly $3 trillion. This is more than Amazon or Nvidia put together. Apple weakness Despite Apple’s recent drop, some investors still expect further declines from Apple due to the deteriorating momentum of its stock price. They believe that shares may start to test their long-term support. “Is Apple finally going to break? In a note, Wolfe Research’s Ginsberg said that the signs were building as the [Wednesday’s] sale took place just after the stock closed the gap created post-earnings. As you may know, we are huge fans of the relative performance. This is why the negative divergence in the stock’s high on July 17th only increases our suspicions. Ginsberg believes Apple will challenge its 200-day average at the low $160s. Apple shares closed at $177 on Thursday, which is about $13 higher than its 200-day average of $163.91. Ginsberg believes Apple will bottom out along with the rest of the market later this month, preparing investors for a rally at year’s end. Ginsberg was not the only one to be short-term negative on Apple in this past week. Dan Niles, a tech investor, said he had sold his Apple stock and was now betting against it. Satori Fund’s founder and portfolio manager, Dan Niles, wrote: “Sold $AAPL & Now our Largest Single Stock Short” on X (formerly Twitter). Fears of Sticky Inflation According to Wolfe Ginsberg’s analysis, the decline in Apple’s shares is only one part of the puzzle that points to problems for the equity markets ahead of next weeks inflation report. The price of oil has risen over the last three months. U.S. West Texas Intermediate Crude (WTI), futures, were hovering at $87 per barrel last week. This is up by more than 20% compared to the $70 barrels that were traded at the beginning of June. Brent Crude Futures on ICE are now above $90 per barrel, which is about 20% more than they were three months ago. The dollar is strengthening on foreign exchange markets. It was the longest winning streak it has had since 2014. The U.S. labour market is showing signs of strength. Initial weekly claims for unemployment benefits on Thursday were below expectations and below 230,000. Investors are worried that the Federal Reserve may have to raise rates again this year due to signs of an economy in the U.S. that is avoiding a recession. Alex McGrath is the investment chief of NorthEnd Private Wealth. He said that “these are small underlying factors” which we believe will make inflation numbers stick, leading to at least one rate hike this year. CME FedWatch Tool shows that traders are almost certain the Fed won’t raise rates in September but they are betting on the possibility of a 25 basis point hike in November. Investors will be watching the August CPI report, which is due to be released next Wednesday. This is the final major inflation report that the Fed receives before its meeting in September. FactSet polled economists who expect the headline number to have increased 3.2% over the past year. This is in line with July’s increase. Core CPI, which excludes volatile energy and food prices, will likely have increased 4.3% year over year, a slower rate than the previous reading, 4.7%. Investors will be more concerned about inflation than expected, which could weigh on the stock market. A surprisingly cool report, on the other hand could boost investors and send stocks up. Ginsberg, Wolfe’s technical analyst, expects some choppy weeks before stocks can “find their footing.” He believes that stocks will bottom out by late September or early Oct., preparing them for the year-end rally. Next Thursday, the August retail sales and August producer prices will be released. The contract between the United Auto Workers and the Big Three Automakers General Motors Ford Motor, Stellantis, is due to expire Thursday. The UAW said that it would strike if a deal is not reached. Calendar for the week ahead All times ET. Consumer Price Index for August 8:30 a.m. Wednesday, Sept. 13, 8:30 a.m. Monday, Sept. 11, Earnings: Oracle Hourly Earnings (August), final 8:30 a.m. Average Weekly Workweek (August), final 8:30 a.m. Treasury budget (August), Thursday Sept. 14, 8:30 a.m. Continued Jobless Claims (9/02) 8:30 am Initial Claims (09/09). 8:30 a.m. Producer Price Index. (August). 8:30 a.m. Retail sales (August). 10 a.m. Business inventories (July). Earnings for Lennar, Adobe, Copart on Friday, Sept. 15, 8:30 a.m. Export Price Index (8th August) 8:30 a.m. Import Price Index (8:30 a.m.) Empire State Index (9:15 am) Capacity Utilization (8:15 am) Industrial Production (8:15 am) Manufacturing Production (10 a.m.) Michigan Sentiment preliminary, September — CNBC’s Michael Bloom & Gabriel Cortes contributed this report.
