Apple, even you... New York Stock Market Declines, No 'Safe Haven' Available

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Even Apple, the company with the largest market capitalization, could not escape the fear of an economic recession. When a downgrade in investment ratings came out on Wall Street, its stock price plunged nearly 5% in a single day.

On the 29th (local time) at the New York Stock Exchange, Apple closed trading at $142.48 per share, down 4.91% from the previous session. This figure far exceeded the Nasdaq index's decline (-2.84%) on the same day. At one point during the session, Apple's stock price fell more than 6%, threatening the $140 level.

Apple had been considered a relatively safe haven in the bearish New York stock market this year. However, on this day, the large investment bank Bank of America (BoA) downgraded its investment opinion on Apple, highlighting growing concerns about earnings due to a slowdown in consumption.

BoA lowered its investment rating on Apple from 'Buy' to 'Neutral' and cut its target price from $185 to $160. This implies an upside potential of only 7% from the current stock price. Additionally, the annual earnings per share (EPS) forecast for fiscal year 2023 was revised down from $6.24 to $5.87.

Wamsi Mohan, a BoA analyst, stated, "As consumer demand weakens, negative impacts on earnings are expected," adding, "With a fragile macroeconomic outlook, Apple faces many short-term risks. It could also face headwinds from a strong dollar." He noted, "Apple's stock has performed well this year and has been perceived as a relatively safe haven, but there could be risks over the next year due to declining consumer demand affecting its previous strong performance."

In particular, this downgrade came right after reports that Apple had canceled its production increase plans due to weak demand for the iPhone 14, further heightening market concerns. Bloomberg News, citing anonymous sources, reported that Apple notified its component suppliers of the cancellation of plans to produce an additional 6 million units of the iPhone 14 product line in the second half of this year.

On the same day, news also broke about the resignation of Tony Blevins, Apple's Vice President of Procurement. Local media reported that earlier this month, a video posted on China's video-sharing platform TikTok showed him making inappropriate remarks such as, "I have expensive cars, play golf, and touch women with large breasts," which sparked controversy.

Apple's sharp decline dragged major tech stocks like Alphabet and Microsoft down to their lowest levels of the year. However, Apple's closing price on this day was still higher compared to its June low (129.04). The year-to-date decline in Apple's stock price was 19.76%, significantly less than the Nasdaq index's drop of 31.37% over the same period. Unlike BoA, on the same day, the small-to-mid-sized investment bank Rosenblatt upgraded its investment rating on Apple to 'Buy.'

This content was produced with the assistance of AI translation services.