Decline in Apple Shares After Barclays Downgrade Impacts US Stock Market

On the first trading day of the new year, Apple's stock experienced a decline that had a significant impact on the overall US stock market, hindering the strong start to 2023 that Big Tech companies had enjoyed.

Barclays Issues Downgrade on Apple Stock

Apple's shares dropped by 3% after Barclays cut its rating on the tech giant's stock from 'equal weight' to 'underweight'. The downgrade was prompted by less-than-expected sales of the new iPhone 15, particularly in the key market of China. Barclays also adjusted its price target for Apple marginally down to $160 from a previous $161.

Analysts from Barclays expressed concerns over reduced volume and mix of iPhone sales, as well as a noticeable lack of recovery in sales of Macs, iPads, and wearable devices. They suggested that the continued trend of weak results, in conjunction with the company's expanding multiples, would not be sustainable in the long run.

Market Impact and Outlook

The downturn in Apple's stock value negatively influenced major indices, with the S&P 500 falling 0.4% and the tech-heavy Nasdaq Composite seeing a 1.3% dip. On the other hand, the Dow Jones Industrial Average managed a slight increase of 0.2%, overcoming earlier setbacks.

During the previous year, Apple's shares had observed a notable 48% surge, contributing to the significant gains of the S&P 500, primarily fueled by the performance of 'Magnificent Seven' mega-cap tech stocks. Nonetheless, looking forward to the rest of the year, market sentiment hints at a potential shift. Investors are showing optimism that the Federal Reserve might start to cut interest rates, which could energize the economy and diversify the rally to include a broader range of stocks.

Such a shift could result in big tech stocks, like Apple, experiencing a sell-off as investors start reallocating their funds to capitalize on the growth of different sectors, anticipating that the broader economy may perform better if the predicted downturn does not occur.

Apple, Stocks, Markets