| The S&P 500 returned to its June low last week. The summer “bear market rally” has officially come full circle, with stocks down 22.65% year-to-date as of mid-day last Wednesday, September 28, 2022. The question now is how much further might stocks fall? This is an impossible question to answer with any precision, but we’ve discussed the fundamental case for additional stock market pressure for months. We won’t revisit the fundamental case in this piece. Rather, we’ll make a very simple observation: |
- Apple, Amazon, and Tesla account for nearly 13% of the S&P 500.
- Apple, Amazon, and Tesla remain 13%, 13%, and 31% above their June lows, respectively.
| We think it is likely these stocks follow the rest of the market, eventually testing their year-to-date lows. Just last week, it was reported that Apple may be scaling back some production plans for the new iPhone 14 as a surge in demand failed to materialize.1 Given their sizable weight, the overall index may find it difficult to make any meaningful progress if/when these stocks eventually succumb to broad selling pressure. So, how much more downside for the stock market? We don’t know, but the trio of stocks mentioned above is worth watching. |
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