Apple Stock Drags Down Nasdaq, Suffers Fifth Straight Day Of Declines

NEW YORK — For most of the year, Apple has propelled the Nasdaq composite index forward. The stock climbed from $405 at the start of the year to more than $630 last week, and the Nasdaq easily beat the gains of other indexes.

Now Apple is sliding the other way and taking the Nasdaq with it.

Apple stock dropped more than $25 on Monday, its fifth straight day of declines. The losing streak has wiped out about $60 billion of Apple's market value. That's more than the most optimistic projections of the value of Facebook.

Apple helped push the Nasdaq composite index down 22.93 points on Monday to 2,988.40. The index is now up about 15 percent for the year after almost reaching 20 percent by the end of March.

"It's been a very quirky market because it's been a few companies that have delivered most of the rally this year," said Mark Lamkin, CEO of Lamkin Wealth Management in Louisville, Ky. "It's not been a broad-based rally."

Apple, still the most valuable company in the world, accounts for 12 percent of the Nasdaq, more than any other stock. It has been on an almost uninterrupted climb for three years, powered by its hot iPhones and iPads.

But last week, a veteran technology analyst boldly issued a downgrade for Apple. He predicted that cellphone companies would probably stop offering such generous subsidies for customers to adopt the iPhone.

Investors may also be locking in profits and getting out before Apple reports earnings April 24. Even after the five-day decline, Apple stock is up 43 percent for the year.

"It's had a huge run," said Burt White, chief investment officer of LPL Financial in Boston. "Some investors probably said, `Might as well take some profits.'"

The broader stock market was flat, helped by strong March retail sales but hurt by continuing concerns about rising borrowing costs for debt-troubled Spain. The Standard & Poor's 500 index dropped 0.69 point to 1,369.57.

Apple dragged down other technology stocks, which fell more than any other industry group in the S&P. Google, which went to trial Monday against Oracle in a copyright case over the Android phone, dropped for the second day in a row.

Utility stocks and banks rose, while energy companies and so-called consumer discretionary stocks fell.

The Dow Jones industrial average rose 71.82 points to 12,921.41, a gain of 0.6 percent. All but six of the 30 stocks that make up the Dow rose for the day, explaining why it rose while the S&P was flat. Apple is not part of the Dow.

The government reported that retail sales rose 0.8 percent compared to the previous month, twice what analysts had been expecting. Skeptics noted that was less than February's 1 percent increase.

They also wondered whether the buying was just a result of the mild winter, rather than a sign of recovery: If people are buying lawn mowers and other warm-weather goods now, then they probably won't be later in the year. Building materials and garden equipment enjoyed the biggest jump in March.

"It's nice to see the retail sales were strong, but it's one month and it's one data point and it's not even the biggest data point," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati. "Honestly, jobs are much more important."

Earlier this month, the government reported that the U.S. added 120,000 jobs in March, about half the pace of the previous three months.

Spain's borrowing costs climbed above the closely watched 6 percent mark as investors grew more worried about the country's ability to pay its debts. Seven percent is the rate at which other European countries have been forced to seek bailouts. Sweden cut its economic forecast for the year, saying that problems elsewhere in Europe were spreading its way.

The yield on the 10-year Treasury note was steady at 1.98 percent.

Among stocks making moves:

_ Mattel plummeted more than 9 percent after reporting a 53 percent drop in first-quarter earnings. The country's largest toy maker is wrestling with lower sales of Hot Wheels and Barbies. It just bought HIT Entertainment, the company behind Thomas the Tank Engine and Bob the Builder.

_ Endocyte doubled to $7.62 after reporting that Merck, the world's second-largest drugmaker, will develop and market its experimental cancer drug. Endocyte, based in West Lafayette, Ind., has no products on the market.

Comments

[skitzlpk]

03:41 PM on 04/18/2012

I remember at the first of 2000, the talk was GE & Cisco were in a race to be the first $trillion market cap company, then the crash came. Apple was making a serious run at that distinction but never forget with those high multiples it only takes a tad of bad news to cause a stampede. Maybe they'll take that $100 billion now & invest to diversify the company more..

[Erdgeist]

04:59 PM on 04/17/2012

Theory 1: The stock is being manipulated through the new media - as usual. The guys with the dough are shaking the little monkeys out of the tree who have taken short positions.

Theory 2: It's TAX TIME! ***

***http://www.thestreet.com/story/11498634/1/apples-tax-induced-selloff-is-over.html

[Chuck1987]

03:50 PM on 04/17/2012

Apple's stock is dropping because someone unleashed a virus that affects Macs.

[jbeachboy32]

03:21 PM on 04/17/2012

anyone feel sorry for apple and their investors after reading this?

[WoBuYaoTweet]

01:19 PM on 04/17/2012

..Aaaand, it's back up $23 from yesterday, regaining nearly the entire loss in less than 24hrs.

[JohnTheMac]

03:30 PM on 04/17/2012

It's like they had a "Spring Sale! 5 Days Only!", yet all these people just sat on their butts and theorized about how slave labor and taxes, and viruses are making a company's stock go down.

[WoBuYaoTweet]

01:52 PM on 04/18/2012

Yeah, sadly I had to sit & watch since I had no cash on hand to jump in... Oh well.
Apparently the same thing happened around Tax Day for the past few years - people taking AAPL profits to cover tax bills, which causes a drop, and then it recovers immediately afterward...

[tarzan322]

12:20 PM on 04/17/2012

Apples success is also it's downfall. Apple enjoyed a cult following that allowed t to build up and gain momentum while one of it's chief competitors (Microsoft) was working on warding off attacks. However Apple's time out of the virus and hacker infested limelight is over. Most people went to Apple because it wasn't rife with the same problems that Microsoft faced. Now, the more Apple takes over that market-share from Microsoft, the more of those problems they face. And while Microsoft has enjoyed years of fixing security related issues due to this, Apple has not. Now, they are about the learn the hard lesson of playing catch-up in the security field. The DOD even put out at one point that it would not use Apple devices because it's security was light years behind Microsoft's. With the release of the last two viruses that affected over 600,000 users on Apple Mac's, it's far from over now. The hackers and "i'll to do" are finding more and more Apples out there to have fun with since Windows is becoming more mature in the security field. Don't think that paying for those over priced Apples will save you. They still use all the same hardware as PC's, it's just wrapped in much more expensive packaging.

[theveggiedude]

03:01 PM on 04/17/2012

The 600,000 figure was revised, down to 300,000 - which is 0.5% of all Mac users. So the biggest attack of malware for OS X is akin to one of the minor attacks on the PC. Half a percent is not going to scare me into buying software protection, especially since it is already been plugged by Apple.

[JohnTheMac]

03:27 PM on 04/17/2012

Well, you're making a story that makes it seem as though Apple 2012 is where Microsoft was in 1995, and so it will be plagued for the next 20 years with 100's of thousands of viruses and attacks, to mirror the microsoft experience, until it matures to the level Win7 is at. Is that the story you're imagining?
It's just not that way. Win 7 and OSX Lion are neck and neck in terms of security. I won't split hairs and claim one is more secure. They're neck and neck, except Apple users haven't had the sour history of being infected with restart viruses, etc. Of course, you're bitter about that, because you stuck with all that misery. Now, you want to feel justified, and you want to see Apple users get their 20 years of hell. Sorry, it just isn't going to happen.

[themacway]

12:17 PM on 04/17/2012

Would love to see that 'veteran technology analyst's' short position just ahead of his prediction. Talk about market manipulation! lolz

[ahnree]

11:48 AM on 04/17/2012

stupid fluff article. don't try finance HP. btw, apple makes up 12% of the nasdaq index. i'm pretty sure the other 88% had something to do with the decline.

[yeskia]

11:30 AM on 04/17/2012

Like Newton observed, everything that goes up must come down...and to think I bought $25K of mutual funds instead of Apple in the early 80's. Oh well, at leats some financial planner is laughing.

[becky bradshaw]

11:07 AM on 04/17/2012

Strip away Apple's Chinese Slave Labor profits, and their Double Irish Tax Scheme with results in "new math", and Apple would be losing money, and a lot of it. That's the problem with a stock so over-valued. When the emperor is finally exposed as without clothes, the embarrassment can lead to a quick dramatic fall.

It seems impossible today, but Apple could be bankrupt in 4-5 years.

[JohnTheMac]

12:24 PM on 04/17/2012

wishful thinking on your part.
Why are other companies, using the same Chinese slave labor, doing so poorly?
Apple isn't doing the tax scheme, 60% of their sales are from outside the US.
With sales growing, and 40% margins, there will be no bankruptcy in 5 years! LOL

[becky bradshaw]

01:09 PM on 04/17/2012

Apple succeeds because they both:

1. Use slave labor. You are correct that Dell and Texas Instruments and Hewlett Packard also use slave labor.

2. Use creative math on their taxes. You are correct that Google and Microsoft and GE also use creative math on their taxes.

Apple does both. Microsoft and Google also do use Chinese slave labor, but hardware is not as large a component of total business, but they are hardly chopped liver in business success.

Apple international sales should not be relevant. When I sell a gadget in Europe, it is still income. I must pay taxes on this income.

Watch out Apple. Shifts can happen overnight.

[shlack123]

10:01 AM on 04/17/2012

Apple's stock is probably falling due to all the recent viruses and security breaches of their products. They aren't as secure as advertised, and people aren't flocking to them as they were 6 months ago.

Just speculation from an IT guy...

[theveggiedude]

03:07 PM on 04/17/2012

No need to speculate - just look at their history on the market the last dozen years. It always happens. A lot.

[shlack123]

03:38 PM on 04/17/2012

Yes, I'm aware that their stock fluctuates. But, if you factor in the mass-infection (650,000+) of Macs by the FlashFake virus (which went undetected for nearly 6 months) and probably just as many more by the SabPub variant, people aren't so willing to flock over to a more-expensive, just-as-vulnerable platform anymore.

Macs have been growing in popularity mainly because they were billed as "virus-free." Many people, including my local clients, moved to Macs on this premise.

I can guarantee you that people are not flocking in droves today to get the newest Macbook, since it is basically nothing more than a more expensive laptop that has the same problem as its Windows counterpart, in the consumer's eyes.

This mass malware outbreak has stayed the rush to Mac because normal people feel as if they were lied to. Those of us in IT knew it would happen, but consumers who were led to believe they were safe on a Mac feel deceived.

Thus...slowing stocks and sales. Mass vulnerabilities in a product will do that.

[hbssl]

09:31 AM on 04/17/2012

How much of this stuff do people need? Once everybody has one, all they have to sell the next version. Which is the same machine with something added that they left out of last version they sold. Their sales model is to keep upgrading the same machine so people buy one improvement at a time, and very slowly

[hman570]

09:23 AM on 04/17/2012

I like pears better

[Thinking Conservative]

08:48 AM on 04/17/2012

apple in free fall. . . . . . . . . . .! The lemmings are running around in circles, someone tell them what to do, has the world come to an end? In silicon valley, first-borns are being sacrificed.

[gblank1603]

01:54 PM on 04/17/2012

Lemmings do not actually follow each other

[bigbe]

06:20 PM on 04/17/2012

They're actually ''pushing'' each other.

[Thinking Conservative]

06:44 AM on 04/18/2012

But they do all go in the same gemeral direction?

[Kyle Noe]

08:34 AM on 04/17/2012

With all the recent ridiculously overpriced acquisitions, enormous IPOs, and soaring stocks, when will we 'officially' be in another tech bubble?