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Apple’s stock downgrade by Bank of America has sparked a fresh tech selloff which sees Alphabet, Microsoft, Tesla, others impacted.
A recent Apple (NASDAQ: AAPL) stock downgrade has sparked a selloff, which is also affecting companies like Alphabet (NASDAQ: GOOGL) and Microsoft (NASADQ: MSFT). As of September 29th, both Alphabet and Microsoft plunged to 52-week lows. Also, the tech-heavy Nasdaq Composite is on a downward spiral again after its worst two weeks since the pandemic began.
Apple stock is currently worth 20% less than it was at the end of last year. Similarly, the Nasdaq is now at a 31% drawdown over the same period.
Gloomy Period for Tech Stocks
The stock of tech giants incurred heavy losses yesterday following a rare downgrade of Apple’s shares by Bank of America (BoA) (NYSE: BAC). A group of BoA analysts led by Wamsi Mohan changed their rating to neutral from buy. This decision was a deviation from the buy position held by a majority of analysts polled by FactSet. The Bank of America downgrade reportedly came after Apple informed suppliers to reduce iPhone 14 production after demand came in less than anticipated. In fact, a report from Wednesday stated that the American multinational tech company had undone plans to boost iPhone production by 6 million units. That also put pressure on the tech heavyweight’s stock.
Before the iPhone production scrap, Apple had been angling for a more substantial phone release in the year’s second half. It planned to produce 90 million in H2.
Generally, tech stocks have endured sizable constraints since the turn of the year as investors have opted for more safe-haven assets. This is in a bid to contain soaring interest rates, as well as adequately brace for a likely recession. Although the Nasdaq Composite rose on Tuesday and Wednesday, the tech-laden index was off 2.8% on Thursday. This drop represents its steepest setback in a day since the second week of September. Meanwhile, the broader S&P 500 also stumbled by shedding 2.1%.
Microsoft, Alphabet Also Impacted by Apple Stock Downgrade
Microsoft came in as the least affected company out of all the tech giants impacted by the Apple stock downgrade development. The New Mexico-based computer software mainstay ended Thursday’s trading session down about 1.5%. However, this was still a 52-week low for Microsoft. Meanwhile, Google parent Alphabet also plunged 2.6% to a 52-week low, while Facebook parent Meta Platforms (NASDAQ: META) dropped 3.7%. In addition, e-commerce heavyweight Amazon (NASDAQ: AMZN) slid 2.7%, while electric vehicle giant Tesla (NASDAQ: TSLA) declined 6.8%.
Other less growth-oriented tech companies also took a hit from the industry’s stock turbulence. For instance, the leading American crypto exchange Coinbase (NASDAQ: COIN) was down yesterday by 8%. This came on the heels of an underweight rating by financial services multinational Wells Fargo (NYSE: WFC).
In other news, Canadian multinational e-commerce platform Shopify (NYSE: SHOP) dropped 8.45%, while electric vehicle company Rivian (NASDAQ: RIVN) also slid by 7.9%. In addition, the shares of popular online game platform and game creation system Roblox (NYSE: RBLX) also suffered a 7% setback.