What happened
Stock markets continued to slide as markets reopened on Monday, with the S&P 500 falling 2.1% through 10:45 a.m. ET and the tech-heavy Nasdaq down 2.9%.
Shares of tech leader Apple (AAPL 2.21%) didn't escape the selling, falling 2% on Monday morning -- but on a somewhat positive note, Apple shares are actually performing slightly better than average today.
Image source: Getty Images.
So what
Why are investors worrying? Rising interest rates are one factor. The yield on 10-year Treasury notes hit 3.185% this morning, the highest level in more than three years. The Federal Reserve is raising rates in hopes of reining in inflation, but higher interest rates make it more expensive to buy big-ticket items such as cars and homes -- and even pay credit card bills. Seen from this perspective, higher interest rates are themselves inflationary.
High interest rates depress consumers' desire to spend, which obviously isn't great news for a consumer electronics goods purveyor like Apple. And adding to investor worries on Apple in particular, Bloomberg is reporting this morning that COVID-19-related lockdowns in China are continuing to disrupt supply chains in one of Apple's biggest manufacturing hubs.
Now what
Some Apple suppliers are attempting to solve at least part of the problem with "closed loop" manufacturing at its China plants, forbidding workers to go out of the factory to prevent COVID getting in -- hoping this will at least help to keep production humming. But as Bloomberg reported over the weekend, this may not be a feasible long-term strategy. At one Apple supplier, Quanta Computer, stir-crazy workers reportedly clashed with guards over the weekend, protesting restrictions on their freedom of movement.
Long story short, so long as restrictions remain in place in China, Apple's supply chain problems can be expected to continue. When Apple warned investors last month that it's expecting to suffer a hit to sales growth because of supply chain issues, it was just telling it like it is.
