Apple (Nasdaq: AAPL) has been one of the strongest stocks in the market. Since the market bottom in late-December 2018, it's up 125%. And since the recent bottom in early-October 2019, the stock is higher by 44%. Its performance is one of the reasons behind the strength in major indices like the Dow Jones Industrial Average (NYSE: DIA), the S&P 500 (NYSE: SPY), the Nasdaq Composite, and Nasdaq 100 (Nasdaq: QQQ) because these indices are weighted by either price or market cap.
The strength in Apple and other mega-cap technology stocks is the primary factor behind the strength in indices despite economic deceleration and outright bear markets in cyclical sectors for the first 10 months of 2019. Apple continued to post solid results due to higher than expected iPhone demand while benefitting from the tailwind of lower interest rates which attracted yield-seeking investors. And the stock's strong performance has continued in 2019, as it's up nearly 8% year-to-date.
Coronavirus Risk
However, one looming risk for the stocks is the coronavirus outbreak which could lead to disruptions in the production of Apple products. China has extended the Lunar Holiday to reduce the chances of contamination and spread, and other provinces have taken more aggressive steps.
Nearly all iPhones are made in China. Most production is based in Zhengzhou and Shanghai which is far away from the most affected area, Wuhan. While there hasn't been any disruption so far, it's possible that it could happen if the outbreak intensifies and more shutdowns are necessary. Investors are awaiting Apple's results on Tuesday for CEO Tim Cook to provide more details on the situation.
Apple has about 10,000 Chinese employees but employs nearly a million people indirectly across the supply chain when looking at raw material extraction, fabrication, production, assembly, testing, packing, and shipping. The most immediate impact could be on its new, lower-end iPhone which is expected to launch in February. New iPhone models typically launch in September. Some factories in other provinces have been affected due to shutdowns in production and transportation.