Why Apple Shares Are Diving Today

BY Benzinga | TREASURY | 06/16/22 10:39 AM EDT

Apple Inc (NASDAQ:AAPL) shares are trading lower by 3.19% to $131.11 Thursday morning amid overall market weakness. The Federal Reserve Wednesday afternoon raised its target fed funds rate by 75 basis points to a new range of between 1.5% and 1.75%, its largest interest rate hike in 28 years.

"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures," the Fed said in a statement...

Following the Fed decision, the 10-year US Treasury yield has spiked, which has continued to pressure valuations in 2022. The 10-year Treasury yield hovered around a 5-year high of 3.495% Thursday morning before dipping to around the 3.398% level. 

When key interest rates rise, the value of future cash flows is reduced for growth stocks, which in turn lowers the value of the stock.

See Also: Federal Reserve Raises Interest Rates by 0.75%, Hikes Inflation Estimates

According to data from Benzinga Pro, Apple has a 52-week high of $182.94 and a 52-week low of $128.46.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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