Apple's ugly day wipes out $172 billion, spills over Big Tech

The iPhone maker dropped 4.9 per cent after Bank of America cut its rating to "neutral" from "buy". PHOTO: REUTERS

SAN FRANCISCO - Apple shares buckled after a rare analyst downgrade exacerbated another wave of selling pressure that wiped out hundreds of billions of dollars in market value from the largest US technology stocks.

The iPhone maker dropped 4.9 per cent after Bank of America (BOA) cut its rating to "neutral" from "buy", warning of weaker consumer demand for its popular devices. The sell-off erased roughly US$120 billion (S$172 billion) from Apple's market capitalisation.

There were few places to hide on Thursday, with investors dumping stocks as United States Federal Reserve officials continue to talk tough on raising interest rates in the central bank's fight against inflation.

There were just three gainers in the Nasdaq 100 Stock Index, which fell 2.9 per cent and was within spitting distance of its June 16 low. Amazon.com and Alphabet fell nearly 3 per cent, while Microsoft dropped 1.5 per cent.

Meta Platforms sank 3.7 per cent after chief executive officer Mark Zuckerberg outlined plans to reduce headcount for the first time ever. The social media giant's shares have fallen 59 per cent this year amid slowing user growth.

Apple has been treated as a haven for much of this year, outperforming fellow mega-caps and the broader tech gauge amid a steep sell-off driven by recession fears. The world's most valuable company, with a market value of nearly US$2.3 trillion, has now fallen about 20 per cent in 2022, compared with a 32 per cent decline for the Nasdaq 100.

With consumer spending expected to cool across regions, BOA analysts said demand for Apple's services had already slowed and product demand was likely to follow. Pressure from a stronger US dollar would only add to its woes, they said.

While "Apple's long-term prospects remain favourable", BOA expects negative estimate revisions and valuation risks in the near term.

The Nasdaq 100 is on pace for its longest streak of quarterly declines in 20 years, yet investors are still bracing for more pain as the Fed aggressively raises interest rates and Wall Street analysts begin cutting profit estimates.

Estimates for 2023 profit growth for tech companies in the S&P 500 have declined about 6 percentage points since the start of 2022, compared with a drop of 4 percentage points for the broader index, according to data compiled by Bloomberg Intelligence. BLOOMBERG

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