Shares of Apple Inc. were pummeled Wednesday with the rest of the market, as investors used the trading session to freak out over iPhone maker Foxconn, Europe, the so-called "fiscal cliff" in the U.S., and maybe even a little politics. $AAPL ended the day at US$558.002 per share, a sharp loss of $22.198 (-3.83 percent), on heavy volume of 28.3 million shares trading hands.
Actually, let's make that "definitely a little politics," because Europe's economy, the U.S. "fiscal cliff," and Tuesday's election in the U.S. are all political at their core, and they all combined to spook the bejesus out of Wall Street.
$AAPL Chart for November 7th, 2012
Source: Yahoo! Finance
The European Commission released revised projections for 2012 and 2013, and when we say revised we mean lowered. The EU now expects a slight 0.3 percent contraction of its economy this year, while 2013 is projected to do just a tad bit better.
Europe has long been in a bind as efforts to decrease debt are having the side effect of stagnating the economy. Wednesday's report from the European Commission told investors this wasn't likely to be fixed any time soon.
The "fiscal cliff" is the name given to a deal reached last year in Washington that pushed a deadline for resolving a budget shortfall for the federal government until 2013, after the election. Congress and the White House have to come up with $600 billion in budget cuts and/or tax increases or face automatic and across-the-board cuts to defense, entitlements, and everything else.
These cuts are widely expected to derail the economy, making a deal absolutely imperative.
Tuesday's election left the Democrats in charge of the Senate, but without a filibuster-proof super-majority, while leaving the Republicans in charge of the House of Representatives. Oh, and President Barack Obama was re-elected, too.
All of which means that nothing changed in the makeup of our government, and investors are worried that one or both parties will let the U.S. drive off that fiscal cliff rather than compromise. The Republicans are committed to not increasing taxes, while the Democrats want to allow the Bush Tax Cuts to expire on the wealthy, hence the concern from Wall Street over the prospects of a solution.
That's the broader backdrop to today's retreat, as all three major indices fell by more than 2.3 percent. AAPL fell even more, by 3.83 percent. Adding a little extra oomph to Apple's sell-off was news from Foxconn that it can't keep up with iPhone 5 demand.
Terry Gou, Hon Hai Precision Chairman told the Wall Street Journal, "Market demand is very strong, but we just can't really fulfill Apple's requests." He added that the production issues are design related, but didn't elaborate on which parts of the construction process are causing problems.
Any constraint of iPhone 5 supplies could lead to Apple missing Wall Street estimates for iPhone sales. Apple hasn't commented on Foxconn's comments.
Jeff Gamet contributed to this report.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.