S&P 500 falls again, is Apple in trouble?

The S&P has tumbled 3.5% again alongside other American Market indices (DOW JONES, -2.5%; NASDAQ, -4.31%) following Trump's steep increase of US Tariffs on China to 145%. The sudden auction of US 30-year Treasury bonds at a higher yield of 5% — the highest since 2023 — succeeded in raising a sufficient amount of funds, however, the broader market for existing bonds remained largely static, with only a modest decline in yields following the auction which reflects a cautios optimism among investors. The limited reaction in the secondary market highlights the lingerning uncertainty around inflation and the broader economic outlook for investors.

Following yesterday's stock market spike, the richest people in the world added roughly $300 billion to their pockets, the highest one day gain for billionaires in history. This certainly indicated a re-establishment of wall street executives in political power, as many commend American hedge fund Bill Ackman and Jamie dimon, the CEO of J.P. Morgan & chase co for their fundamental role in persuading Trump to pause the Tariff's due to worries of having an "economic nuclear winter". It would be fair to assume that most wall street investors would not have expected to see this sort of turmoil during Trump's second term a few months ago, as many were excited at the expectation that Trump would ease regulations and lower taxes. However, the reality has hit them with a very different picture, Trump no longer has a fixation on the stock market, as he did in his first term, rather his new fixation is a trade war.

Amid all of the chaos with global equities, Apple, who's stock's gains from the past 12 months have been erased, is starting too have a worrying outlook for investors. Many investors are faced with the challange of whether they should sell, hold or buy Apple stock. This is an unprecentended challange for many, as no analyst could have predicted this sort of change- many are starting to overlook Apple investments, and for good reason.

Only about 5% of Apple's major suppliers are located in the U.S. meaning that production costs will increase, and some products could see prices double. Although scary, the reality is that this will most likley occur. A third of Apple's supplier's are from mainland China, which is currently subject to a 145% Tariff. The fact that apple has the ability to distribute its suppliers globally is the only reason it can offer an iphone for $799. The complexity of reshaping Apple's supply chain all whilst looking for ways to avoid increasing the prices of it's flagship models, would prove extremely costly and time-consuming. Apple's average wage for factory workers outside of the U.S is almost always under $10,000, whilst the average wage in the U.S is $40,000. If Apple were to manufacture in the U.S costs would skyrocket, with Even Dan Ives, an analyst at apple, stating that iphones could cost as much as $3,500 if they were to be produced in the U.S.

Around 17% of Apple's total Revenue comes from China. If China were to ban Apple products within the country (which is a possibility if Apple evacuates China's factories) Apple could see what is now $67 billion in Revenue disappear.

One of the World's largest suppliers of wind and solar power, NEXTERA, is a candidate for a blow dealt by Trump's tariffs. It is an example of a more realistic shot at fully internalising the production process within the U.S. The company already sources all of it's wind turbines and batteries in the US. Whilst the tariff's are affectingitss transmission lines through steel and aluminium, it's solar panels are sourced globally. Nextera is now looking to domestically source it's solar panels too, in hopes that this would expanditss market share ahead of others, by making the switch first. This will also provide new jobs, and will contribute to U.S' manufacturing, which aligns with Trump's vision of restoring America as an industrial powerhouse.

Sources: Bloomberg, The guardian, BBC News, Yahoo Finance ((TipRanks))