While much attention on Sept. 29 was fixed on the failed bailout vote in Congress and its impact on the Dow Jones industrial average, tech stocks also came under pressure.
The technology-heavy Nasdaq dropped 199.61 points, or 9%, to 1983.73, the third-largest percentage decline ever. The Sept. 29 tech-stock rout was eclipsed only by the Black Monday crash on Oct. 19, 1987, when the Nasdaq plummeted more than 11%, and Apr. 14, 2000, when it tumbled 9.7%.
Among tech stocks, the most notable loser was computer and consumer electronics maker Apple (AAPL), the subject of at least two analyst downgrades. Apple fell 22.98, or more than 17%, to 105.26, the company’s fifth-biggest decline in percentage terms. The rout came eight years to the day after Apple’s biggest-ever one-day percentage decline — on Sept. 29, 2000, it lost more than half its value.
Investors sold tech on concerns that, barring a bailout for the financial sector, cutbacks in lending will cause companies to trim or delay orders on computers, software, networking gear, and other tech products. Wall Street’s woes are also depressing consumer sentiment and could make for a bleak end-of-year selling season for consumer electronics makers and online retailers. “Tech is not at the epicenter of the problem,” says Doug Freedman, managing director at American Technology Research in San Francisco. “[But] tech definitely carries higher-than-average multiples and above-average risk for the reward. We’re at a point where people have little tolerance for risk.”
Figuring on Fewer Shoppers
RBC Capital Markets (RY) analyst Michael Abramsky cut his rating on Apple, citing survey data showing consumers are less willing to spend on consumer electronics. At Morgan Stanley (MS), analyst Kathryn Huberty cut her rating because of pressure on Apple’s gross margins — costs are rising for back-to-school promotions and other products. Apple shares finished the day down…