Tech Sector Stumbles, Drags AAPL Down With It

| Apple Stock Watch

Shares in Apple dropped throughout Thursday's session as investors wiped away yesterday's gains in the tech sector. Apple, IBM, Microsoft, HP, and Intel all joined in the selling, shedding the Nasdaq's 33 point gain from Wednesday's session, dropping more than 36 points.

Concern about Citigroup ($1.02, a loss of $0.11 (-9.73%)) and GM ($1.82, down $0.38 (-17.27%)), two non-tech companies, helped set the selling mood on Wall Street. Both companies became the focus of renewed worries about their long term health.

While those two companies set the dour tone, the tech sector was knocked around, in part, after Shaw Wu suggested in a research note to clients that PC sales could be set for a pause as Windows users and companies await the release of Windows 7, which is currently expected later in 2009.

Marketwatch reported that he also noted that the release of Windows 7 could become a buying catalyst, but that either way, the computer industry was in for a hit this year.

Google was also sent into negative territory after an analyst cut the search leader's estimates for 2009 and 2010. Google is trading at $306.00, down $12.92 (-4.05%).

In the meanwhile, no news is not necessarily good news for Apple, as the company's stock dipped to $89.43, losing $1.74 (-1.91%), erasing most, but not all, of Wednesday gains. There were no analyst comments or other Apple-related news sparking the drop, and the company was merely caught up in the general tech sector malaise.

Indeed, the closest thing to Apple news that is likely to be of concern to investors was the news that the company is well ahead of all of its rivals in terms of inventory management, an issue that affects cash flow and profitability.

The Nasdaq is currently at 1,317.50, off by 36.24 (-2.68%), the S&P 500 is at 687.25, down 25.62 (-3.59%), and the Dow slipped to 6,645.26, down 230.58 (-3.35%).

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

Comments

geoduck

For all the complex algorithms and computer models, and talking head experts advising people what to do, the markets are ruled by mob psychology. Panic and buy.You might miss an opportunity, buy buy buy even if you don’t have the money. Panic and sell. Sell even if the stock is solid. Sell sell sell even if your head tells you not to.

So now Apple loses value because investors are waiting for Windows 7.

Morons.

If they had used their head to start with they would not be in this mess.

Bosco (Brad Hutchings)

Nope. AAPL is caught in the what the Wall Street Journal calls the Obama Slump. There is real regime uncertainty on Wall Street with all the talk of bailouts and the idea that Washington, D.C. thinks it can run an economy. Hint to Washington, D.C.: you’re spelling “ruin” wrong.

Bosco (Brad Hutchings)

P.S. Before anyone calls me a Republican hack or even a Republican, I’m not one. And you just have to look at how Bush cowered in the face of Paulson’s blustering to realize that Republicans aren’t much better, though perhaps a tad less brazen. They all suck.

geoduck

Personally I have a fair Keynesian streak in me so I think the government should have been more involved in the markets all along. If they had been (you know doing things like enforcing existing laws and prosecuting those that should have been) this mess would at least have been much less severe. On the other hand I’m bothered by the government dumping money into companies run by the greedy and stupid, though I understand the logic they use to justify it.

I don’t like the term Obama Slump, this mess predates his election. He just happens to be the one in office right now. Will he be able to fix it? Beats the heck out of me, but whatever he tries has to be better than the laissez-faire, supply side BS that got us into this mess.

Bosco (Brad Hutchings)

Keynesianism says nothing about the government being more or less involved in markets. It’s main tenant is using government spending to stimulate aggregate demand. Run deficits in recessions, surpluses in good times. Extend unemployment benefits, build highways, that sort of stuff. Even your most ardent free marketer (of which I am one) would take that over $760 billion of payoff pork.

Frankly, I don’t think the mess is as bad as advertised. Its alleged badness is being used as an excuse for all sorts of very radical proposals that would not stand on their own in normal times or even slightly bad times. And that’s what investors are reacting to. When you have Timothy Geithner attacking oil and gas companies, it’s not about a strong economy anymore.

At any rate, if you think a guy who fifteen years ago was chanting “Hey hey, ho ho, slum landlords have got to go” has any business setting up roundtables (with his ever present teleprompter at the center) on remaking the heath, auto, or financial industries, test the Kool-Aid when he passes it around. Oh, and I’d say the same about a former MLB team owner, Arkansas governor, Yale first baseman, actor, submarine driver, Michigan football player, or Laugh-In co-host. They aren’t that smart and don’t have enough information to do anything good.

geoduck

There’s an old saying (which I’m significantly paraphrasing because I don’t know where it came from), that a dictatorship is founded on the idea that one person knows better than everyone else, which can’t be right. Democracy on the other hand believes that everybody knows better than any one person, which doesn’t sound right either.

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