Investors Sour on Apple
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A surprise interest rate cut from the Federal Reserve may have rescued the stock market from a steep decline on Tuesday, but it was no help for Apple shareholders.
Apple shares plunged in late trading Tuesday after the company issued a much weaker than expected outlook for the current quarter.
Apple posted 35% December quarter sales growth to $9.6 billion, along with earnings of $1.58 billion, or $1.76 a share. Both numbers were much better than expected, and Mac and iPhone shipments were solid. But iPod sales of 22 million were below forecasts, and the company's current quarter outlook $6.8 billion sales and 94-cent earnings was well below estimates, sending shares skidding.
For the rest of the market, the day turned out much better than it could have. Following a global sell-off on Monday, U.S. stock futures were headed sharply lower Tuesday morning when the Federal Reserve cut its benchmark interest rate by three-quarters of a point. It was the first emergency Fed funds cut since September 17, 2001, and the Fed's largest rate cut since October 1984.
The news did much to ease fears that the Fed was unresponsive to a market and economic freefall, but stocks still ended the day down more than 1%, adding to the market's worst-ever start to a year.
Yahoo lost 4% on reports that it is considering cutting hundreds of jobs, while eBay fell 4% on reports that CEO Meg Whitman could retire.
Motorola shed 7% ahead of its quarterly results, and Alcatel Lucent lost 12% on a Goldman Sachs downgrade.
Oracle was another big decliner, down 6%, and Microsoft, Cisco, Dell and Sun were off more than 3% each.
The Nasdaq lost 47 to 2292, the S&P fell 14 to 1310, and the Dow lost 128 to 11,971. Volume rose to 6.51 billion shares on the NYSE, and 3.16 billion on the Nasdaq. Decliners led by a 19-13 margin on the NYSE, and 20-10 on the Nasdaq. Downside volume was 55% on the NYSE, and 79% on the Nasdaq. New highs-new lows were 32-1,098 on the NYSE, and 36-982 on the Nasdaq.