Apple has made history by becoming the first trillion dollar company in America. Veuer’s Josh King has more.
Apple, which already held the crown as the nation’s most-valuable company, made Wall Street history Thursday when it became the first publicly traded U.S. corporation to reach a market value of $1 trillion.
Apple, whose stock is owned by investors ranging from billionaire Warren Buffett to mutual fund giant Vanguard to millions of working Americans through funds owned in their 401(k)s, passed the milestone days after reporting another stellar quarter, highlighted by a jump in revenue to $53.3 billion and the sale of 41.3 million iPhones.
The iPhone maker broke the $1 trillion barrier when its stock briefly hit the magic share price of $207.05, according to Nanex, which supplies market data to the financial industry. Online brokerage TD Ameritrade said the history-making trade occurred at 11:48 a.m. ET.
“Apple has gone where no company has gone before,” says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
The individual company milestone follows an extraordinary stretch of tech innovation and arrives as the bull market for stocks, now more than nine years old, looks to overtake the 1990s bull as the longest in history later this month.
Heading into Thursday’s trading session, Apple shares were up 19.1 percent so far in 2018, more than double the return of the broad S&P 500, which has gained 5.2 percent.
Apple’s rise has been driven largely by its wildly successful iPhone, which has been instrumental in shaping the mobile world we live in and is now a staple of daily life for tens of millions of Americans who use it to make calls, send texts, snap pictures, check Facebook and stay on top of the news.
Apple’s good fortune is also good news for Main Street investors. With a nearly 4 percent weighting, the stock is the biggest holding in the Standard & Poor’s 500 stock index, an investment that is owned by most individual investors through index funds and exchange traded funds that track it and in 401(k) plans.
“Apple’s gain boosts about every 401(k) since it is a big holding in just about every large-company mutual fund,” says Paul Hickey, co-founder of Bespoke Investment Group, a New York-based market research firm.
Given that the S&P 500 is weighted by market value, Apple, as the most valuable company in the index, has the biggest impact on the index’s price moves.
It’s often said that when Apple goes, so goes the market.
“Apple truly is the apple of the market’s eye,” says Erik Davidson, chief investment officer at Wells Fargo Private Bank in Chicago.
Apple won the race to $1 trillion, edging out rivals, such as Amazon (whose market cap was $877 billion as of Tuesday’s close, according to S&P Dow Jones Indices), Google parent Alphabet ($858 billion) and Microsoft ($817 billion), the other main contenders that were racing the iPhone and iPad maker to reach the milestone.
“This feat,” says Hickey, “is a reflection of just how strong a company Apple is.”
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Wall Street pros say Apple’s ability to grow so large has been driven by a confluence of factors, ranging from its global reach, the explosion in global smartphone demand, and the rise and proliferation of the internet.
Apple also enjoyed a “first mover advantage,” as it got ahead of the competition in the mobile phone space back in 2007 when it launched the first version of its iPhone.
“Apple has global market appeal and brand power,” says Joe Quinlan, chief market strategist at U.S. Trust in New York. “With the iPhone, they’ve created market demand virtually out of thin air.”
The company is also generating significant sales from its services unit, which includes things like its App Store, Apple Pay, iTunes and its iCloud business. In its most recent fiscal third-quarter, services revenue jumped 31% to $9.55 billion.
Apple was also able to shrug off the trade dispute with China, as its sales in that country rose 19 percent to $9.6 billion in the quarter ended in June.
To put the $1 trillion market value into perspective, Apple would rank as the 15th biggest economy in the world if it were a sovereign nation, says Quinlan.
And the total value of the S&P 500 stock index, which represents roughly 70 percent of the U.S. stock market’s value, was only $864 billion back in 1982, according to S&P Dow Jones Indices.
Apple’s ascent to the $1 trillion mark could spark some talk of a top for the stock and the broader market, but some Wall Street pros downplay one stock’s impact on an S&P 500 stock index that is valued at nearly $24 trillion.
“What does it mean for the market? Not much, especially since Apple’s and the market’s valuation are “not showing signs of exuberance,” says Davidson of Wells Fargo Private Bank.
And given that economic conditions in the U.S. are still good, the stock market “still has room to run,” Davidson says.
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