(Bloomberg). Apple Inc. is currently at its lowest point since February last year and will be down Monday. This trend can be reversed. If history’s any guide, look for a weaker dollar.

On Jan. 3, the tech company reached a market capitalization of $3 trillion. The stock lost 13% since then while mega-cap tech shares have taken a beating. The correlation isn’t new. Each time Apple’s market value has hit a trillion-dollar milestone, the broad market gauge has entered a technical correction. A dollar slump was the key to its recovery.

When Apple first reached a market cap of $1 trillion dollars in August 2018, it sparked a 20% technical correction in the S&P 500. The same thing happened two years later when it crossed the $2 trillion threshold. It then fuelled the tech disaster of 2020. Other factors, such as Federal Reserve decisions or macroeconomic developments, have also played an important role. But there’s no mistaking Apple’s role as a stock-market bellwether. 

The logic isn’t complicated. Major U.S. assets are often considered safe havens by international buyers in times of global instability or crisis. Stock-market investors understand this to be big tech. The demand for security can lead to assets being overvalued. That is why the dollar’s weakness acts as a gauge for foreign investors. Thanks to the influx of capital from overseas, tech has been a driver for growth in many parts of the post-pandemic period. And in turn, it’s created an inverse correlation between the dollar and U.S. equities. 

A mere 0.2 is the correlation between Apple shares and Bloomberg Dollar Index (NASDAQ) as a proxy to big tech shares. This may not seem statistically significant but it is important to note that the inverted correlation between these assets at the bottoms and the tops of two corrections was 0.18. The correlation isn’t stronger is because it has typically been preceded by dollar strength — this time, attributed to hawkish Fed policy. Therefore, the more recent moves don’t hold as much weight.

Keep an eye on dollar. As it weakens and gives foreign investors more incentive, the S&P 500 is likely to reverse the selling that has thus far marked 2022. History has shown that big tech including Apple will be a major player in this.

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