Nectria canker is a fungus disease caused by Nectria galligena. It is occasionally found on apple nursery stock shipped into the eastern United States. The economic effects of the disease in the eastern United States are minor. The fungus grows deep into the wood and kills new wound callus as it develops. This annual killing of successive layers of callus results in perennial, target-like, zonate cankers. Eventually the cankers girdle the tree, resulting in a dieback of infected limbs or trees. The cankers are sometimes visible on the trunks of nursery trees at the time of planting, although latent infections can appear later in the season. Nursery trees purchased from the western United States and Europe should be examined carefully for symptoms of the disease. Trees with cankers should be returned to the nursery for replacement or discarded.
For more information and images, read this article on Nectria Canker of Apple.
Answer provided by A. L. Jones and T. B. Sutton.