Apple was worth more than $ 1 trillion in early November. Now it is valued at $ 880 billion.
The mighty tech titans and their seemingly endless profit lines, which run one of the longest bull markets in stock, look a little less invincible. The shares in Apple and Google’s parent company, Alphabet, are down 10 percent since the market reached peak while Facebook and Amazon have fallen more than 20 percent.
Investor’s beliefs have been eradicated by slowing growth and a trade war with China, as well as a steady stream of revelations of integrity, security issues and inadequate management. If technical stocks can not shake the fears, the rest of the market can feel the pain.
“You look extremely selling in the only favored area that everyone ran into,” said Tony Dwyer, chief marketing manager with the Canaccord Genuity brokerage firm in New York.
[ Asian markets fell on Tuesday and European stocks opened lower, as global exchanges followed Wall Street’s leadership. ]
The stock appears to be linked from the rest of the US economy. Unemployment is still low and growth is on track for its best annual earnings since 2005. The third quarter results in the S & P 500 companies are expected to increase by 28 percent, according to the data company Refinitiv.
But investors are becoming increasingly diligent about corporate prospects. Europe and China face economic weakness, while margins can be hampered by higher interest rates and rising labor costs.
“There is definitely a slowdown going on globally,” said James Bianco, CEO of the financial market research firm Bianco Research in Chicago. “The United States has definitely been stronger than the rest of the world. But the fear is unbearable.” If the rest of the world is slowing down, it will eventually slow us down. “
Shares in industrial companies, considered particularly vulnerable to increasing trade tensions with China have fallen more than 10 percent since September. Economically sensitive financial shares have been 7.5 percent. Shares of residential builders who are sensitive to rising interest rates have fallen more than 30 percent.
The possibility of higher borrowing costs also weighs on smaller companies that often borrow money by issuing floating interest rates, which can be harder to pay when interest rates rise. The Russell 2000 Index for Small Cap stock stocks is 14 percent lower than the high.
“This is simply a continuation of the most recent risk crisis or growth horror we have seen most recently since the end of September,” said Talley Leger, a capital strategy with Oppenheimer Funds.
When the stock market hit its peak in September, technology had made way for 50 percent of the year’s profits. The technology giants seemed primarily immune to sales following wider economic concerns.
No longer. During Friday, about a quarter of the market decline since September due to Amazon, Apple, Facebook and Alphabet, according to data collected by S & P Capital IQ. The sharp sale on Monday will only add that.
Investors seem particularly focused on evidence that extraordinary profits generated by these giant technology companies are threatened.
The regulatory aspect is threatening the Facebook shares, as it concerns the fallout and costs of a data violation, loss of integrity and management errors. The pressure has been strengthened through a review of its response to Russian efforts to use it to influence the 2016 presidential election. The stock dropped another 5.7 percent on Monday.
The alphabet is also faced with a regulatory crackdown on business practices in Europe and is affected by selected officials in the USA about political bias. Its shares fell almost 4 percent on Monday.
The regulation is largely troubling technology investors. Apple’s chief, Tim Cook, has warned that the new rules for the industry are “inevitable” as he told Axi us in an interview that sent on Sunday .
“I believe in the free market. But we have to admit when the free market is not working,” he said, “I think Congress and government will at some time pass something.”
If the technology layer can Taking care of the concerns depends partly on whether companies can continue to deliver strong earnings performance even though the global economy is significantly softening. Latest performance reports from major technology companies have done little to ensure investors.
Soft demand for Apple’s new phones has damaged its shares and its suppliers. The month began with Apple, which represented a lower than expected forecast for sales. Last week, a supplier warned investors that one of its largest customers had cut orders.
As Apple’s stock price peaked at just over $ 232 the 3 October, stocks have fallen by almost 20 percent, which spends more than 200 billion dollars leaves from the company’s market value. Its shares were down almost 4 percent on Monday.
Amazon reported a slowdown in its core revenue growth at the end of October and sent the shares lower. For investors, who often see revenue as a good indicator of the strength of demand in the economy, it was more important than the $ 2.9 billion in profits reported by the company.
But if they actually produce the figures that Wall Street analysts expect, recent decline in major technology stocks could give a buyer opportunity for some investors. Important valuation measures by Apple and Alphabet hit several years high this summer. But the recent decline has left these values considerably lower. Prices on Facebook and Amazon are relatively low compared with expected earnings, which means that these shares look like “cheap” for some investors.
But they may need to be even cheaper before investors are tempted to snap them up. That is why some people expect the market feeling to be much worse before stocks can resume their climb.
“I’m looking for a bit more bearishness,” said King Lip, chief executive officer at wealth management company Baker Avenue.