Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: technology | Apple | stocks | market

Tech Rally Unraveling With Apple Poised for $50 Billion Slump

Wednesday, 22 July 2015 06:56 AM EDT

The biggest technology rally since October was knocked cold, as disappointing earnings reports punished Microsoft Corp. and left Apple Inc. in danger of its worst-ever loss of market value.

Five days after Google Inc.’s earnings spurred the largest one-day wealth creation by any U.S. stock, computer and software shares are tumbling. Apple, Microsoft and Yahoo! Inc. retreated on disappointing results. Apple, the world’s most valuable company, slid almost 7 percent in late trading Tuesday, a slump that would wipe more than $50 billion from its value. It traded 5.1 percent lower in Wednesday’s premarket.

Hopes were high for the industry as earnings season began, with technology shares leading a rebound in U.S. equities after overseas tensions eased. The Nasdaq Composite Index rallied to an all-time high on July 17 after Google surged 16 percent, adding $65 billion to its market capitalization.

“The expectation coming into Apple earnings was ‘boy, they’re going to lift all boats!’” said Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which manages about $170 billion. “There’s general earnings weakness across the board for the S&P.”

Futures on the Nasdaq 100 Index declined 1.1 percent at 4:36 a.m. on Wednesday in New York. The index lost 0.1 percent in the regular session Tuesday, halting an eight-day rally of 7.5 percent that pushed it to a 15-year high.

Cracks in the facade appeared before Tuesday. Intel Corp., kicking off earnings by the largest U.S. technology companies last week, said it expects the personal-computer market to fall further than expected, spotlighting the challenges for chipmakers. International Business Machines Corp. dropped 5.9 percent during regular trading Tuesday after sales fell for a 13th quarter.

Earnings Forecasts

At the start of the year, analysts forecast the technology sector would deliver a 13 percent increase in profit during the second quarter, according to a Bloomberg survey. Those expectations were lowered to a 2.4 percent gain as of July 17.

Apple slid in late trading after iPhone shipments for the fiscal third quarter and the company’s revenue forecast for the current period missed analysts’ projections, raising questions over whether demand for the device has peaked.

If the stock sinks that much in regular trading, the hit to market cap would be the second-biggest in the company’s history, after a $59.6 billion drop on Jan. 24, 2013.

Asian suppliers to the smartphone maker retreated. Japan Display Inc. dropped 4.1 percent in Tokyo, while AAC Technologies Holdings Inc. sank 6.9 percent in Hong Kong.

Apple Recovery

Apple had recovered almost 10 percent in the past two weeks leading up to earnings, after being pushed to the brink of a correction. The shares dropped 9.7 percent from an all-time high in February through July 9, erasing $83 billion of market value, amid concern a rout in China’s market would leave consumer with less money to buy gadgets.

Yahoo fell 1.8 percent in late trading Tuesday after forecasting sales in the current quarter below analysts’ estimates, a sign Chief Executive Officer Marissa Mayer’s turnaround effort is still a work in progress.

Microsoft slid 4 percent following its largest-ever quarterly net loss, hurt by a $7.5 billion writedown after the purchase of Nokia’s handset unit failed to rescue the company’s mobile business.

© Copyright 2023 Bloomberg News. All rights reserved.

The biggest technology rally since October was knocked cold, as disappointing earnings reports punished Microsoft Corp. and left Apple Inc. in danger of its worst-ever loss of market value.
technology, Apple, stocks, market
Wednesday, 22 July 2015 06:56 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved