Interest Rate Rises 0.5%: Why Is It Good For Apple Stock?

There are a couple of ways to look at the impact of interest rates on Apple, its business and $Apple (AAPL.US)$ stock: from a fundamentals perspective and from a market sentiment point of view.
Fundamentally, higher rates are bad news for Apple. This is the case because the hike disincentivizes consumers from buying more products and services and, to a lesser extent, cost of borrowing for Apple goes up. The company currently has $120 billion in debt.
The first point above is particularly important if aggressive monetary tightening leads to sharp economic deceleration. Apple could suffer from lower units sold and a decrease in average prices, while the supply chain challenges would not necessarily ease by much.
That said, keep in mind that longer-term interest rates have already been going up aggressively for the past few months — i.e., much of the potential “damage” has already been done. The Fed’s decision on May 4 only formalizes the move higher at the short end of the yield curve.
From a market perspective, the recent increase in the Fed funds rate is probably neutral. This is true because the market had fully anticipated the move higher. If anything, commentary about what the Fed will do next has been mildly to moderately positive news.
It would not “feel right” to say that the 50-basis point bump is good for Apple. But the Federal Reserve’s optimism towards inflation containment is certainly positive. It is hard to predict the future, but a rally in Apple stock from here would not surprise me much.
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