S&P 500 again flirts with record, but Apple holds it back
The Standard & Poor's 500 index again teased market watchers by flirting with its all-time high Wednesday, but a substantial decline by the most valuable company in the United States, Apple, again kept the broad-based index from joining its blue-chip sibling in record territory.
More than three weeks after the Dow Jones industrial average, which tracks 30 big-name American companies, established a new record high, the S&P continued to push right to the lip of its all-time high before falling back. The S&P's record closing high is 1,565.15, established in 2007, and the index moved within two points of that number for the second consecutive day Wednesday. According to Bloomberg News, the index has moved higher than 1,560 in seven sessions just since March 14, but has still not crested its record.
Some experts have said that they will continue to have doubts that the market's rally can persevere without a record from the S&P to match the Dow's, as the former index represents a far wider swath of American corporations.
"I want to see the S&P 500 hit one (a record) pretty quickly, a month or so," to confirm the Dow's move as legitimate, Schaeffer's technical strategist Ryan Detrick said when the Dow hit its record on March 5
One of the biggest reasons the S&P has stayed lower than its all-time high sits in Cupertino, where Apple 's 2013 downfall has weighed on the index. The company's heavy weight on the index, the results of its U.S.-leading market capitalization, means moves like Wednesday's 2 percent drop have an outsize effect.
Investors have been worried about Apple since its last earnings report, despite that report showing a record quarter for sales and profits. The issue is Apple's future, with the company and analysts predicting the first quarter with year-over-year declines in sales for the tech titan in a decade.
Still, Apple had been on a rebound since hitting a 52-week low of $419 on March 4, with closing prices surpassing $460 in the past three sessions. Shares took a dive Wednesday, however, after Pacific Crest analyst Andy Hargreaves jumped on the bandwagon, gutting his projections for iPhone and iPad sales as well as Apple earnings for the next two quarters.
Hargreaves' note suggested that Apple's high-priced devices are losing steam as cheaper options grow in popularity.
"We consider the reduction to our large-format iPad estimates to be the most significant, as this appears likely to be a sustained trend as tablet demand shifts to smaller and less expensive models," Hargreaves wrote.
Apple could be in for more hits from similar notes as analysts who have not already trimmed their targets for the company's quarterly earnings do so, continuing a trend that, according to a post this week, has seen 497 of the S&P 500 companies increase their price-to-earnings ratio this quarter, with Apple one of the other three.
Oracle and Facebook gain, Google and Netflix fall back
Oracle (ORCL) is one of the other two S&P companies with a decreasing P/E ratio, along with another software firm, EMC. The Redwood City giant managed to bounce back Wednesday from recent weakness brought on by a disappointing earnings report, adding 1.3 percent to help balance Apple's decline.
The SV150 index of SIlicon Valley's largest tech companies still dipped 0.3 percent, however, as other large-cap tech giants sank. Mountain View search giant Google (GOOG) declined 1.2 percent to $802.66 as it began selling its Google Glass wearable devices, which the company says it will attempt to manufacture in the United States. Two of the brightest stock surprises this year in SIlicon Valley, Hewlett-Packard (HPQ) and Netflix (NFLX), saw momentum slip with losses of 0.3 percent and 0.2 percent respectively, though Netflix scored a coup with a deal for an original series from the creators of "The Matrix."
Facebook had a strong day, however, gaining 3.5 percent to $26.09 to break out of a funk that had seen its price steadily decline in the past month on concerns about its ad business. Wednesday's rally could have been sparked by an announcement about its advertising business late Tuesday, in which the Menlo Park social network said it would begin using targeted ads in users' news feeds.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 4.04, or 0.12 percent, to 3,256.52
The blue chip Dow Jones industrial average: Down 33.49, or 0.23 percent, to 14,526.16
And the widely watched Standard & Poor's 500 index: Down 0.92, or 0.06 percent, to 1,562.85
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.