Apple is the most important stock in the S&P 500 — and the iPhone is the company's key product. So it's wise for investors to pay attention to a new release — it's just that they're not impressed anymore.
The market's reception of Apple's new iPhone 14 due today is already lukewarm. Wall Street seems bored of the iterative changes. Apple's stock is down 6.3% in the month leading into the Sept. 7 announcement, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's the stock's worst performance heading into a new announcement since the shares dropped 8% in the month ahead of the Sept. 2015 release of the much-maligned iPhone 6s.
"Apple is expected to release a new version of the iPhone (on Sept. 7), and while these events typically excite consumers and tech commentators, investors have tended to have a more muted reaction," said Bespoke Investment Research.
The S&P 500's Reliance On Apple
It might seem odd for S&P 500 investors to watch the performance of the latest iPhones. But given Apple's huge weight in the index, it makes perfect sense. Apple's market value is now $2.5 trillion. It's also Warren Buffett's largest holding in dollar terms, by far.
Apple has been the largest and most important stock in the S&P 500 every year since 2019, says Howard Silverblatt, strategist at S&P Dow Jones Indices. Just Apple alone accounts for more than 7.2% of the S&P 500. No other company in history has accounted for a bigger slice of the S&P 500 than Apple did in 2021 and 2020 at more than 6.8%. Even in its heyday in the 80s, IBM only accounted for 6.4% of the S&P 500.
Microsoft is a distant No. 2 in the index now, at 5.8%. And just these two companies, Apple and Microsoft, go a long way to explain why the information technology sector makes up 27.3% of the S&P 500 this year, more than any of the 11 S&P 500 sectors.
So, the iPhone matters for the S&P 500.
S&P 500 Investors' Read On The iPhone 14
Consumers are expecting the new iPhone to be a minor change, and that's certainly investors' read on it, too.
Even if you go back three months, you'll see Apple's stock is only up 10.2% in that time. That's below the average 15.9% rise in that time frame of all the iPhone models going back to the original. It's important to note, though, the S&P 500 is down nearly 3% in that time, too. Similarly, in the prior six months leading up to tomorrow's announcement, Apple shares are up just 6.6%. That's a fraction of the typical 22% run-up in the six months ahead of an iPhone announcement. It's even less than the 7.3% rise in that time of the Technology Select SPDR.
In many ways, the magic of iPhone announcements is long gone, even though the profitability is still there.
Looking For The iPhone's Future
"Even though a new product may be exciting to consumers and anyone part of the Apple fandom, investors have tended to turn a cold shoulder to these events," Bespoke said. "On average across the 18 days in which a new iteration of the smartphone was announced, AAPL's stock has only risen 22% of the time with an average decline of 0.32%. In fact, AAPL has not reacted positively to an iPhone announcement since the iPhone 11 in 2019."
Fans hope that larger gains will come after new iPhone hits the stores. But investors should note most action in the stock doesn't coincide with iPhone releases. The stock, on average, fell 0.2% on the day of the announcement and rose just 3.8% in the following three months.
"Performance of AAPL is generally positive in the few months after a new iPhone drops," Bespoke says. "However, the average and median gains come up short versus the norm for all periods since the start of 2007; the ... iPhone era for the company."
New iPhone? S&P 500 Investors Don't Care
Investor Reactions To New iPhones
| Model | Announced | Stock % ch. week ahead of ann. | Month ahead ann. stock % ch. | Stock % ch. 3-months ahead of ann. | 6-months ahead of ann. stock % ch. |
|---|---|---|---|---|---|
| iPhone | 1/9/2007 | 9.1% | 4.9% | 26.4% | 77.2% |
| iPhone 3G | 6/9/2008 | -2.4% | -1.0% | 42.6% | -4.8% |
| iPhone 3GS | 6/8/2009 | 3.2% | 11.3% | 62.3% | 46.5% |
| iPhone 4 | 6/7/2010 | -2.3% | 6.4% | 12.5% | 26.9% |
| iPhone 4S | 10/4/2011 | -6.7% | -0.4% | 5.9% | 10.2% |
| iPhone 5 | 9/12/2012 | -0.1% | 6.3% | 17.2% | 14.4% |
| iPhone 5S | 9/10/2013 | 1.2% | 8.8% | 14.4% | 14.4% |
| iPhone 6 | 9/9/2014 | -5.1% | 3.4% | 4.4% | 29.3% |
| iPhone 6S | 9/9/2015 | -1.9% | -8.0% | -14.3% | -10.9% |
| iPhone SE | 3/21/2016 | 3.3% | 10.3% | -1.2% | -7.4% |
| iPhone 7 | 9/7/2016 | 2.1% | 0.0% | 8.7% | 6.0% |
| iPhone X | 9/12/2017 | -0.8% | 2.1% | 10.8% | 14.3% |
| iPhone XS | 9/12/2018 | -2.6% | 5.8% | 15.9% | 24.2% |
| iPhone 11 | 9/10/2019 | 5.3% | 7.8% | 11.6% | 17.9% |
| iPhone 12 | 10/13/2020 | 7.0% | 8.1% | 23.9% | 69.0% |
| iPhone 13 | 9/14/2021 | -5.5% | -0.7% | 13.8% | 22.9% |
| iPhone 14 | 9/7/2022 | -1.7% | -6.3% | 10.2% | 6.6% |
| Averages prior to iPhone 14 | 0.3% | 4.1% | 15.9% | 21.9% | |
| ETFs | |||||
| Technology Select SPDR (XLK) | 9/7/2022 | 14.3% | 6.0% | 13.4% | 7.3% |
| S&P 500 (SPY) | 9/7/2022 | -1.0% | -5.3% | -2.6% | -6.9% |
