The tech sector was hit hard yesterday on the heels of the failed Wall Street bailout, was rejected by the House of Representatives. The $700 million plan was voted down 228 to 205. Stocks tumbled as a result: the Nasdaq Composite was headed for one of its worst daily percentage drops in history. With an hour to go in regular trading, the Dow Jones index was down 6.5 percent from Friday. The tech sector took massive losses: Google fell more than 8 percent to reach its lowest level since 2006, and other big names such as Hewett-Packard, IBM, and Microsoft were all down more than 5 percent.
Faring worst was Apple, which was down 18.5 percent. Adding to Apple’s market woes is the two separate downgrades it received from investment analysts RBC and Morgan Stanley. Despite the success of the iPhone 3G, launched in July, and the company’s mythic status as indie Goliath, Apple’s stock is down more than 30 percent since January.
At $110, Apple shares are at their lowest since May 2007.
According to RBC’s Mike Abramsky, the near future tech outlook is the weakest he’s ever seen, saying that 40% of consumers plan on spending less money on electronics in the next ninety days. Morgan Stanley’s Kathryn Huberty says the only growth market is in budget PCs, a fact that might further hurt Apple.
“PC unit growth is decelerating and the remaining source of growth is increasingly in the sub-$1,000 marker, where Apple does not play,” said Huberty.