By Joyce Yu
The Wall Street looks like it’s having a not-so Merry Christmas. U.S. shares slipped at open on Tuesday as investors returned from the holiday break to a full day of trading in the United States. Trading in Asian markets was muted.
Edging away from record highs set earlier this month, the Dow Jones industrial average, S&P 500 and Nasdaq continue to drift lower on Tuesday after falling 0.1% on Friday. Still, it’s been a growth year in the markets, with the Dow up an impressive 25%. The S&P 500 has soared 20% this year. Tech heavy Nasdaq is the biggest winner surging nearly 30%.
Led by Apple, tech stocks however show signs of exhaustion as we are about to turn into 2018. Apple’s shares fell more than $4 to $170.88 in premarket trading after Taiwan’s Economic Daily reported that demand for iPhone X could come in below expectations in the first quarter.
Shares of iPhone maker’s suppliers – Broadcom, Skyworks Solutions and Qorvo were also dragged to fall between 1% and 2%. Chipmakers Micron and Advanced Micro Devices were lower about 1.5% each.
A decade on from the launch of the first generation of iPhone, Apple has rolled out its much-anticipated iPhone X, featuring an edge-to-edge display. China-based Sinolink Securities analyst Zhang Bin said in a report on Monday that handset shipments in first quarter might be as low as 35 million, or 10 million less than he previously estimated.
“After the first wave of demand has been fulfilled, the market now worries that the high price of the iPhone X may weaken demand in the first quarter,” Zhang wrote.
U.S. investors are equally losing confidence in Apple. New York-based JL Warren Capital said shipments would drop to 25 million units in the first quarter of 2018 from 30 million units in the fourth quarter. The drop reflected “weak demand because of the iPhone X’s high price point and a lack of interesting innovations”, and “highly publicized and promoted X did not boost the global demand for iPhone X.”
Nomura also downgraded Apple’s rating to “neutral” from “buy”, citing iPhone X sales as well as other positive factors were already baked into the stock price.
Apple’s sole assembler – Foxconn’s main iPhone X manufacturing hub in Zhengzhou, China, was said to have stopped recruiting workers. An Apple spokeswoman refused to comment on market rumors but Apple CEO Tim Cook said during his recent trip to China he “couldn’t be happier” with the demand for the iPhone X in the country.
A Reuters analysis of Chinese social media, on the other hand, shows that interest in the iPhone X spiked around its launch but has not kept pace with the highly popular iPhone 6 released in 2014. There were only 4.97 million Weibo posts mentioning the iPhone X so far in December compared to over 11 million for the iPhone 6 in the equivalent period in 2014, the analysis showed.