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Apple stock dives below $140 fueled by COVID lockdowns in China

The iPhone maker Apple (NASDAQ: AAPL) stock pulled back more than 20% after hitting its record high at the start of 2022. Apple stock failed to regain the upside momentum following the release of robust Q2 financial results after the company warned that supply chain constraints in China.

Apple stock dives below $140 fueled by COVID lockdowns in China

The iPhone maker Apple (NASDAQ: AAPL) stock pulled back more than 20% after hitting its record high at the start of 2022. $AAPL touched their lowest level in a year this week. The stock bearish sentiment continues in the last couple of weeks as the stock market has experienced broader losses since the start of April.

Recently the Investors are worried that the Fed's aggressive shift to raise interest rates could end up tipping the U.S. into a recession, and those fears are pushing many people out of tech stocks in particular. On the other hand, the complete tech industry is bracing for a slowdown in consumer spending as rising fuel and materials prices.

Apple released a stellar earnings report by end of April for its second fiscal quarter of 2022, the revenue rose 9% year-over-year. But Apple stock failed to regain the upside momentum following the release of robust financial results after the company warned that supply chain constraints in China would cut into the company’s revenues in the upcoming quarter. Apple expects that Covid-related shutdowns in China and semiconductor shortages would lower its June-quarter sales by $4 billion to $8 billion.

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“We have estimated the constraints to be in the range of $4 to $8 billion and these constraints are primarily centred around the Shanghai corridor”. Apple CEO Tim Cook had said this during the Q2 earnings call. “The Covid-related disruptions are also having some impact on customer demand in China,” Apple CFO Luca Maestri said.

According to a report by Nikkei Asia, one of the upcoming iPhone 14 "models is about three weeks behind the usual schedule due to the lockdowns in Shanghai." The production issues apparently also affect the production of new iPhone 13-series units. Meanwhile, Apple is reportedly exploring ways to expand manufacturing outside of China. India and Vietnam are two countries targeted by the tech giant to build new facilities.

$AAPL short-term technical outlook

Technically the overall momentum remained bearish for the stock. In the short term, $133 is the immediate support level, If the stock breaks below $133, then the next crucial demand area to watch is $122/120. On the upper side, $AAPL is likely to find immediate resistance at $150, any break above the $150 level could lead the stock price towards the next resistance levels of $156 and $160.

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