Shares of Apple Inc. (NASDAQ:AAPL) registered their best week in almost five years, driving a rally in technology shares that outperformed the larger market.
The stock rose 11 percent to $114.92, its highest weekly climb since October 2011. Apple was the only stock in the blue-chip index to jump during a major sell-off on Tuesday that dragged the Dow Jones Industrials down 1.4 percent. Meanwhile, the blue-chip index added 0.2 percent for the week.
Technology stocks have been gaining lately. Tech shares in the S&P 500 climbed 10 percent in the past three months, more than double the gains of any other group. The figures show a big shift from last year, when a dive in tech underlined investor concerns about sluggish US economy growth.
Apple has been a key driver of those recent gains. Eliminating the tech giant would cut the technology segment’s September gain through Thursday from 1.5 percent to 0.2 percent, according to S&P 500 and Dow Jones Indices, which claims Apple remains the largest company in the index based on market capitalization.
Despite a 0.6 percent decline on Friday, the company added nearly $63 billion in market value this week.
Tech shares gained 3 percent this week, compared with the 0.5 percent weekly gain for S&P 500. It is also the only sector that has risen over the previous month. On the other hand, the tech-heavy NASDAQ Composite Index surged 2.3 percent for the week.
Apple’s iPhone 7 Sales Up
The company’s steady week follows a recent fall down. Shares lost nearly 5 percent within two days after last Wednesday’s iPhone 7 release, shortly diving into negative territory for this year. Some analysts said that the iPhone provided only additional improvements over the earlier versions, which as better battery life and water resistance, instead of exciting new features. Getting rid of the device’s headphone jack was also a dividing decision.
According to Apple, it had already sold out some versions of the new iPhone 7 since pre-orders started last week. Earlier this week, T-mobile US Inc. and Sprint Corp. suggested that demand was strong, without giving out figures. Buyers lined up to purchase the new smartphones on Friday.
Elsewhere, Samsung (KS:005930) Electronics (OTC:SSNLF) is recalling its latest Galaxy Note 7 smartphone due to potential battery fires.
Several market players and analysts explained that indications of strong iPhone sales were reassuring after sales fell for two straight quarters.
“This shows that the user base is loyal and wants to upgrade either when new tech comes along or when their new phones wear out,” a chief investment officer stated.
Apple’s 6.7 percent rise between the new phone’s launch and Thursday’s close is the stock’s best performance over the last five years in the hiatus between the announcement and the launch. Since the iPhone was first introduced in 2007, shares have earned a median of 4.3 percent in that window, rising seven times and dropping three times.
The data imply the stock sometimes cools off in the weeks after, declining five times and climbing four, recording a median slip of 1.7 percent.
Apple traded at approximately 14 times its last 12 months of earnings as of Thursday’s close, compared with nearly 20 for the S&P 500, appearing like a negative bargain at a time when several investors are worried about extended valuations.