Dow Jones Plunges 700 Points as Cases of Coronavirus Surge; Apple Stock Called a Buy but Still Sinks


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The stock market once again cares about the coronavirus pandemic as cases surge across the U.S. and Europe. The U.S. recorded a record number of confirmed cases on Friday, with many states driving the increase. On top of the COVID-19 surge, a stimulus bill getting signed before the election is looking less likely as the days tick away without an agreement. The Dow Jones Industrial Average (DJINDICES:^DJI) was down about 2.4% at 11:45 a.m. EDT on Monday.

Apple (NASDAQ:AAPL) was down less than the market on Monday following some analyst optimism regarding the iPhone 12 and the company’s vast services business. Other stocks in the Dow exposed to a worsening pandemic didn’t fare as well.

A medical worker standing near a man in a car.

Image source: Getty Images.

Apple tapped to outperform

Expectations of strong demand for non-iPhone products, an acceleration of the services segment, and a big upgrade cycle for the iPhone 12 have led analysts at Evercore to put Apple stock on its “tactical outperform” list. Evercore also maintained its outperform rating and its $135 price target.

Evercore sees the potential for Apple’s fiscal 2021 results to outpace analyst expectations, driven by a higher average selling price for iPhones, new service offerings, and solid sales of Macs and iPads. The iPhone 12 family raises the base price from the iPhone 11 family, although a slightly cheaper iPhone 12 Mini will become an option in November.

Evercore does concede that results for the next couple of quarters may not impress. For the quarter ending in September, a lack of new iPhone models and the availability of the budget-priced iPhone SE could drag down iPhone sales. For the quarter ending in December, Evercore is worried about Apple’s gross margins.

The company is launching new iPhones into a U.S. economy that has been both ravaged by the pandemic and propped up by the $2.2 trillion CARES Act passed in March. That stimulus bill, which sent checks to Americans and added a weekly $600 supplement to unemployment payments, almost certainly contributed to Apple’s…