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Apple's Falling, but This Beaten-Down Stock Is Flying Higher Thursday

By Dan Caplinger – Dec 2, 2021 at 8:46AM

Key Points

  • Markets tried to rebound Thursday morning from losses over the past two days.
  • Apple reported poor demand for its iPhone 13, which could hurt holiday season results.
  • However, another stock rebounded from recent losses.

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Market crosscurrents continue to leave investors confused.

Investors continued to wrestle with confusing conditions in the stock market on Thursday morning. After a couple of days of declines -- with plenty of ups and downs along the way -- market indexes tried to mount a recovery in the premarket session. However, not all of the indexes reacted favorably. As of 8 a.m. ET, futures contracts on the Dow Jones Industrial Average (^DJI 0.07%) were up 215 points to 34,217, and S&P 500 (^GSPC 0.31%) futures had gained 15 points to 4,523, but Nasdaq Composite (^IXIC 0.51%) futures were down another 17 points to 15,853.

Much of the downward pressure on the Nasdaq came from poor performance from Apple (AAPL 0.73%), whose shares fell on news that could have an impact on its near-term financial results. However, another high-profile stock managed to gain altitude after having suffered some big losses lately. Below, we'll go into Apple's woes and then reveal which stock got some long-awaited news that could help build positive momentum for a key part of its global business.

Airplane just above a runway at twilight.

Image source: Getty Images.

Warning signs from Apple

Shares of Apple were down sharply in the premarket session, falling nearly 3%. The iPhone maker had seen its stock hit new all-time highs as recently as yesterday, but the latest news from the company has investors rethinking the bullish case at least for the immediate future.

Apple has apparently told the companies that supply key parts and components for its electronic devices that demand  for the iPhone 13 product line isn't as strong as it had been previously, according to multiple reports. Investors had already been prepared for a reduction in the pace of iPhone production because of challenges related to the worldwide shortage of semiconductor chips. However, even given those lowered expectations, Apple apparently isn't certain that it can meet them.

How exactly that news will cascade down the industry supply chain remains to be seen. Tech peers Broadcom (AVGO 0.92%) and Advanced Micro Devices (AMD 2.12%) were down modestly in premarket trading, but not to the same extent as Apple itself.

Overall, the iPhone 13 has still been a big success, driving more consumers to upgrade as 5G functionality becomes more widely available. Yet as Apple's market capitalization has drawn closer to the $3 trillion mark, the need for the smartphone pioneer to crush expectations has grown, along with the potential downside if it fails to do so.

This stock is headed skyward

On the other side of the coin, shares of Boeing (BA 0.02%) were up more than 5% in the premarket session Thursday. The move erased losses yesterday and came amid good news that the aerospace giant has been waiting to see for a long time.

Boeing investors are well aware of the huge impact the grounding of the 737 MAX aircraft had on the company. Long before the pandemic crushed the airline industry, Boeing was facing huge challenges because of design issues that had led to multiple fatal accidents involving the aircraft model.

The 737 MAX has been back in service in the U.S. throughout 2021, but that hasn't been the case around the world. In particular, China had been slow in making progress toward getting 737 MAX planes back in the air. However, Chinese aviation regulators released an airworthiness directive that specifies the various changes and maintenance actions that will be necessary before it will declare 737 MAX fit to fly again.

To be clear, China will still need to clear Boeing's planes to fly in Chinese airspace before operators will be able to return them to service. Nevertheless, with China representing a key growth market for aerospace manufacturers, the move is a step in the right direction and could help Boeing regain some of the recent losses in its share price.

Dan Caplinger owns shares of Apple and Boeing. The Motley Fool owns shares of and recommends Advanced Micro Devices and Apple. The Motley Fool recommends Broadcom Ltd and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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