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New economic indicator: iPad sales
ASSOCIATED PRESS
Photo
In this file photo taken Jan. 10, 2011, trader Gregory Rowe, right, works with fellow traders on the floor of the New York Stock Exchange.
Associated Press
NEW YORK
The news last week that Apple’s Steve Jobs is taking a leave of absence was a big story.
But something else about the company got far less attention and could be even more important to investors this year.
Corporations “are adding iPads to their approved device list at an amazing rate,” Peter Oppenheimer, Apple Inc.’s chief financial officer, told analysts Tuesday.
Apple’s products, more known for their consumer appeal, are now used in by employees of Wells Fargo, Archer Daniels Midland, DuPont and others.
Splurging on $500 iPads is a sign that the business cycle is starting to turn and that companies are starting to spend a record amount of cash they’ve accumulated.
If the trend is real, companies will do what consumers haven’t — spark a strong economic recovery. That could push the Standard & Poor’s 500 index to its third straight year of double-digit percentage gains.
The last time that happened: the tech-boom days of the late 1990s.
“You’re going to see a bigger commitment to growth this year because companies have underspent for quite some time,” says Bill Stone, chief investment strategist at PNC Asset Management.
Financial, technology and energy companies are the most likely to benefit from business spending, says David Bianco, a market strategist at Bank of America.
Each group is up about 3 percent this year, nearly one percentage point ahead of the overall S&P 500. Those three groups account for nearly half of index’s value.
The continued success of financial, energy and technology stocks would point to a new stage of this bull market, which has returned nearly 100 percent since it began in March 2009.