Dow Jones Tumbles 1,200 Points on Virus Fears; Apple Stock Outperforms; Disney Stock Plunges

Analysts are still optimistic about Apple, and Disney faces the prospect of a surge in coronavirus cases as it tries to reopen its parks.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The good times are over for the Dow Jones Industrial Average (DJINDICES: ^DJI). The Dow was down 4.3% at 11:50 a.m. EDT Thursday as the possibility of a second wave of the novel coronavirus spooked investors.

Confirmed cases of the virus are surging in some places around the U.S. following the easing of lockdown measures and the reopening of the economy. In Texas, more than 2,500 cases were confirmed on June 10, setting a record for the state. Florida, California, and nearly a dozen other states are also seeing an increase in cases.

Apple (NASDAQ: AAPL) outperformed the Dow thanks to some analyst price-target bumps, but shares were still down amid the broad sell-off. Disney (NYSE: DIS) stock was hit much harder. The company is preparing to reopen its U.S. parks in a highly uncertain environment.

Apple outperforms on analyst optimism

Apple couldn't fully escape the steep sell-off in the major stock indices on Thursday, but a trio of analyst price target bumps helped limit the damage. Apple stock was down just 1.4% by late morning, making it one of the best-performing Dow components.

Wells Fargo chimed in on Thursday morning, raising its price target on Apple stock from $315 to $385. The bank based its optimism on mobile phone registration data for April and May in China, which showed a recovery in smartphone demand. Apple's total revenue from China was down 7.5% in the quarter ended March 28.

Bank of America also got in on the action, reiterating a buy rating on Apple stock and raising its price target from $340 to $390. BofA expects a quick recovery in demand in emerging markets, strong App Store sales in China, and gross margin improvements due to a mix shift toward pricier iPhones. However, the bank sees U.S.-China trade tensions and a lengthening iPhone replacement cycle as two risks facing the tech giant.

Lastly, HSBC upgraded Apple stock from reduce to hold, raising its price target from $225 to $295. The upgrade was based on the expectation that Apple will have a successful launch of 5G iPhones later this year.

How well Apple's new iPhones sell this year will depend partly on the state of the U.S. economy. While the situation is improving following the easing of lockdown measures across the country, a potential second wave of the novel coronavirus could dampen that recovery. If consumers aren't keen on shelling out for an expensive new smartphone amid a recession, Apple stock may have a rough road ahead.

Disney slumps as second wave fears mount

Few companies are more exposed to risk in a second wave of the virus than Disney. The stock was down 5.8% by late Thursday morning as investors chewed on the idea that the pandemic is far from over.

Disney is planning to begin a phased reopening of its Disney World Resort in Florida on July 11. The company has also unveiled plans to begin reopening its Disneyland Resort in California on July 9. Under the plan, which still requires government approval, various portions of the resort will reopen on dates ranging from July 9 to July 23. Capacity will be significantly limited, and a new theme park reservation system will be in place.

The big question: How many guests, especially those who need to fly in from other parts of the country, will return to the company's properties amid a pandemic? This question is complicated by the potential for a second wave of the virus, which could make people less likely to make the trip. Disney may be facing a long period of depressed attendance, and it may take a successful vaccine for the company's parks business to fully recover.

Disney stock has surged from its March low on optimism surrounding the company's reopening of its properties. That optimism seems to be fading as cases of the virus surge in some parts of the country.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Timothy Green owns shares of Bank of America. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney. The Motley Fool Australia has recommended Apple and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

Prediction: These 2 AI stocks will rebound in the 2nd half

One of these stocks finished the first half unchanged, and the other fell in the double-digits.

Read more »

Person using a remote to flick through Netflix.
International Stock News

Can Netflix stock double by 2028?

The stock has skyrocketed, gaining more than 500% over the last three years.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Up 1,590%, should you buy Nvidia at its all-time high?

The demand for Nvidia's GPUs isn't letting up, which is driving strong revenue and profit growth.

Read more »

Woman and man calculating a dividend yield.
International Stock News

Prediction: This could be Meta's next big move (and it may happen on July 30)

My prediction is this could be the tech giant's next major move.

Read more »

A tech worker wearing a mask holds a computer chip.
International Stock News

Nvidia chips are flowing to China again — what that means for AI adoption trends

The U.S. government just changed its rules to allow Nvidia to ship its H2O chips to China.

Read more »

Green apple with US hundred dollar bill printed on it.
International Stock News

Should you buy or sell Apple stock before July 31? The answer may surprise you

The technology giant now has a market cap of $3.1 trillion.

Read more »

Woman and man calculating a dividend yield.
International Stock News

Is Nvidia stock a buy now?

Here's a look at whether it's too late to buy the first $4 trillion company.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
International Stock News

This trillion-dollar artificial intelligence (AI) stock could double your money in 5 years

The tech leader is making moves, and if enough things go right, these initiatives could lead to superior returns in…

Read more »