Shares of the consumer tech giant Apple (NASDAQ: AAPL) had blasted over 11% higher, as of 1:55 p.m. ET today, after President Donald Trump announced a 90-day pause on higher tariff rates for most countries and a universal 10% tariff base during the pause, citing progress on negotiations, according to CNBC. The rebound follows one of Apple’s worst four-day stretches of trading since 2000.
President Trump’s surprising tariff announcements last week sent Apple shares into freefall. Shares sunk over 18.5%, shedding some $770 billion of its market cap at the trough of the fall. Apple is believed to be one of the worst-positioned stocks in the “Magnificent Seven” due to all the revenue it generates and products it makes in countries like China that have been looking at steep tariffs.
While some countries will see a 90-day reprieve, Trump said he would leave high tariffs in place on China and actually raised them to 125% due to the “lack of respect that China has shown to the World’s Markets.” The U.S. government also had a successful Treasury auction, alleviating some near-term debt concerns and sending stocks positive.
Goldman Sachs Managing Director Sung Cho also recently appeared on CNBC and essentially called the sell-off of Apple an overreaction. Cho believes investors are underestimating the company’s pricing power, fortress balance sheet, and “flexibility in its supply chain.”
If the trade war with China is long-lasting, Apple still has many challenges ahead to navigate. However, this recent news at least gives investors some confidence that Trump is willing to negotiate. Given its strong brand power and balance sheet, I think you can buy Apple stock on a long-term investing horizon.
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