Apple’s size can move markets up –- and down
A customer tries out the Apple iPhone 5 inside the Apple Fifth Avenue flagship store on the first morning it went on sale on September 21, 2012 in New York City.
Stacey Vanek Smith: How big is Apple? Well, it accounts for about 5 p[ercent of the S&P 500 stock index and more than 10 percent of the Nasdaq Composite Index. There are even predictions iPhone sales could give a lift to the U.S. economy.
Alec Young: I don’t think we’ve ever seen one company move the needle the way that Apple does now.
Alec Young is a global equity strategist for S&P Capital IQ. He says Apple’s size has been great for markets.
Young: The fact that Apple has such a large weighting in the S&P 500 index has been good because Apple’s been doing extremely well, and it’s one reasons the stock market has been doing very well.
The S&P 500 is up 16 percent this year. Apple alone is responsible for more than 2 of those percentage points, says Michael Farr, chief investment officer at Farr, Miller and Washington.
Apple’s share price has added $300 so far this year...
But what Apple has given, Apple could take away
Michael Farr: If Apple takes a big hit, certainly markets are going to come down.
And we’d all suffer, says Georgetown finance professor James Angel.
James Angel: This is what I call Apple risk. If Apple implodes, every investor is going to feel the pain.
Angel says if you own shares in a mutual fund, you probably own Apple stock. If you’ve got a 401K, it’s probably got some shares of Apple. And if you invest in those prudent index funds, Apple’s a big slice of that, too. Which begs the question…
Angel: Is that a dangerous thing?
Angel says not yet -- and as long as those new iPhones sell well, we don’t have to worry about that.
Vanek Smith: So, for the sake of the economy, should we all run out and get the new iPhone? Is that what you’re saying?
Angel: No. (laughs)
But it couldn’t hurt…
In New York, I’m Stacey Vanek Smith for Marketplace.