Largest Apple share drop in four years

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Wall Street stocks were muted on Wednesday despite the sharpest single day sell-off in Apple, the world’s largest company by market value, in four years.

Apple lost 6.4 per cent to $538.81 as the iPhone and iPad maker suffered its steepest decline since December 2008.

Analysts attributed this week’s woes for the company’s shares – down almost 8 per cent from Monday – to a number of factors, including diminished expectations that Apple would issue a special dividend before the end of the year.

Colin Gillis, tech analyst at BGC Partners, added that fresh data on forecast tablet sales for 2012 released on Wednesday showed that the company was facing stiffer competition from Google.

He said: “With an expectation that the current line-up of Apple products will not be refreshed any time soon, investors are concerned about a product vacuum after the holidays. Competition is growing and there is no specific catalyst to provide upside to Apple’s stock at the moment.”

The Nasdaq Composite index fell 0.8 per cent to 2,973.70 as the tech-heavy benchmark was dragged down by Apple’s poor performance. Shares in Google were 0.5 per cent lower at $687.82.

The S&P 500 was 0.2 per cent higher at 1,409.28. US equities held on to marginal gains as investors set aside worries over a lack of progress in US budget negotiations. The Dow Jones Industrial Average rose 0.6 per cent to 13,034.49.

On Wednesday, President Barack Obama met business leaders to discuss his position on the fiscal cliff of spending cuts and tax increases that could hurt the US economy. Earlier this week, Democrats rejected a counter-offer put forward by Republicans.

“Despite the ongoing talks, there are still other positives coming out of the economy right now, including strong results from the housing sector,” said JJ Kinahan, chief derivatives strategist at TD Ameritrade.

“There seems to be a lot of underlying optimism in the economy and investors are hoping that government doesn’t hurt that by prolonging these discussions.”

Freeport-McMoRan Copper & Gold fell heavily as the US mining group said it would move back into the oil business and acquire two companies for $20bn in a deal first reported in the Financial Times.

Shares in Freeport fell 16 per cent to $32.16 as it said the takeovers valued the equity of Plains Exploration and Production at $6.9bn in cash and stock and McMoRan Exploration at about $3.4bn in cash. Plains shares rose 23.4 per cent to $44.50, while McMoRan Exploration shares jumped 87 per cent to $15.82.

Facebook shares moved higher as Nasdaq OMX said the social networking site would be added to its Nasdaq 100 index.

Shares in the company gained 0.9 per cent to $27.71. The move comes after Infosys, the Indian IT company, said it would shift the listing of its American depositary shares to the New York Stock Exchange last week.

Shares in Pandora Media, the internet radio company, fell 17.5 per cent to $7.80 after it said lower advertising would widen its expected full-year losses late on Tuesday.

Brian Nowak, analyst at Nomura, cut his price target for the company’s shares by 28.5 per cent to $5. He said: “If the ad environment is weakening, we would expect experimental ad dollars on new media, like Pandora, to be among the first cut.”

Financial sector stocks were among the strongest performing industry group on the S&P 500, rising 1.3 per cent.

The gains were led by Citigroup, the US bank, which said it would cut 11,000 jobs in an effort to lower costs. Shares in Citi gained 6.3 per cent to $36.46. Bank of America shares were close behind, moving 5.7 per cent higher to $10.46.

Shares in Starbucks, the coffee chain retailer, fell 0.7 per cent to $50.79 as it announced plans to expand its presence in the Americas.

The company said it is seeking to open 3,000 new stores in the region by 2017, with at least half those stores in the US.

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