Is the Federal Reserve Hurting Apple Stock?
The Federal Reserve Board last dropped its federal funds rate to an unprecedented zero amid the Q4 2008 housing bust and credit crisis. From there, Federal Reserve and Treasury officials were to add the terms Troubled Asset Relief Program, Operation Twist, and Tapering to the American financial lexicon. In summary, Federal Reserve officials would be purchasing government bonds on the open market, in order to stimulate the domestic economy.
Interestingly, William C. Dudley, Federal Reserve Bank of New York President, has already admitted, “We don’t understand fully how large-scale asset purchase programs work to ease financial market conditions.” Last December, the Federal Reserve still announced that it would be tapering its monthly bond-buying program by $10 billion to $75 billion.
Over the past eighteen months, Apple (NASDAQ:AAPL) stock was to establish an all-time high at $705.07, on September 21, 2012, before promptly reversing course and descending to a multiyear nadir of $385.10, on April 19, 2013. From there, Apple was to rally sharply off its low to close out the January 21, 2014 trading session at $549.07. The recent volatility in Apple shares may have been the result of Federal Reserve policy and rhetoric. Traders often leverage low interest rates to speculate. The Apple brand, however, has emerged as somewhat of a proven commodity as its ecosystem matures and growth rates slow.