The U.S. economy is beginning to reopen, even as the coronavirus pandemic remains far from contained. The long-term effects on the economy and consumer behavior may not be fully known for years, and it remains unclear how quickly economic activity will pick back up as restrictions are lifted. The Dow Jones Industrial Average (^DJI 0.56%) was down 0.4% at 12:20 p.m. EDT Monday.
Shares of Apple (AAPL -1.22%) managed to move higher despite data suggesting a steep decline in U.S. iPhone sales last month. Meanwhile, the stock of Boeing (BA -0.24%) sank after a major airline said it would stop taking deliveries of planes for the time being.
Apple has a rough April
New data from KeyBanc details just how weak U.S. demand for Apple's iPhone was during the month of April. The pandemic has forced Apple and most retailers to close or limit the operations of their U.S. stores, and consumers have been pulling back on spending due to the economic uncertainty. As a result, U.S. iPhone sales crashed 77% in April compared with the same period last year, and they were down 56% from March.
The iPhone 11. Image source: Apple.
KeyBanc did note that there was an improvement in iPhone sales in late April, likely due to the stimulus payments that were deposited into Americans' bank accounts. But that bump in sales is unlikely to be sustainable if it was driven by stimulus payments. Online sales of iPhones rose in April compared with March, but it wasn't nearly enough to overcome the lack of retail sales.
Apple launched its more-affordable iPhone SE in late April, so it's possible the sales boost late in the month was partly driven by the $399 device. While iPhone sales will presumably improve as retail stores are allowed to reopen, a weak economy will likely put pressure on demand for many months, and perhaps even longer.
Apple's fiscal second quarter, which ended on March 28, featured a 7% decline in global iPhone revenue. Unless a dramatic rebound in demand occurs in May or June, Apple's fiscal third-quarter iPhone sales will likely be worse.
Shares of the tech giant were up about 1.1% by early afternoon Monday. The stock is just 4.5% below its 52-week high.
An airline pauses plane deliveries
Demand for air travel has been decimated by the pandemic, and it's highly uncertain how long it will take for the industry to bounce back to pre-pandemic levels. On Monday, the CEO of Qatar Airways said that he doesn't expect a full recovery until 2023 or 2024.
A slow recovery is a problem for Boeing, which was already reeling from the grounding of the 737 Max before the pandemic hit. As airlines try to survive what could be a prolonged period of depressed demand, they certainly don't need many new planes.
Reuters reported on Monday that Qantas Airways (QABS.Y -0.93%) had informed Boeing and Airbus (EADSY) that it does not intend to take delivery on any new planes in the near term. Qantas had previously planned to take delivery of three Boeing 787-9 planes this year.
Boeing has slashed production of some planes, including the 787 and 777, to better align output with demand. The company plans to restart production of the 737 Max this month, although the plane has still not been cleared by regulators.
Boeing stock was down 2.3% by early afternoon Monday. The company may be in for a years-long slog as demand for air travel slowly recovers, and it may be a very long time before the stock fully recovers. Shares are down about 66% from their 52-week high.
