Yahoo Finance Technology stocks finish crazy day on a weak note
(Stock prices udated at 4 p.m.)
Technology stocks suffered from severe volatility on Monday, clawing back from huge early losses sparked by chaos in Chinese markets only to finish with still serious losses.
The moves included some huge swings in the share prices of even the largest tech stocks, such as Apple (AAPL), Google (GOOGL) and Facebook (FB). Apple's stock market value, for example, swung from $524 billion at the opening to over $620 billion by early afternoon and closed at $588 billion.
Investors have been in a near-panic over the past few days, as Chinese stocks have plummeted amid signs of slower economic growth in the world's second-largest economy. Further losses there overnight helped push the entire U.S. market to massive opening losses on Monday -- the Dow Jones Industrial Average was down over 1,000 points initially -- before buyers swooped in to turn the tide.
An all-out rout in the technology sector that began last week seemed poised to continue in opening trading on Monday. But most stocks recovered in the first hour of trading and many turned positive by the afternoon, only to weaken again at the close.
Early on, the depth of the sell-off prompted some analysts and investors who thought tech stocks were overvalued to change their view. "Our stance has changed since last month," said Peter Wahlstrom, director of tech and telecom equity research at Morningstar. "Valuations are looking a bit more interesting here, obviously, but we'd still be selective." Morningstar favors shares of Oracle (ORCL), Google, Comcast (CMCSA) and Qualcomm (QCOM) among tech stocks.
Technology sector leader Apple, which has seen much of its revenue growth arising from China for the past year, dropped as much as 13% at the open on Monday, bounced back to a small gain by noon, and finished trading at $104.09, a loss of almost 2%. The opening price of $92 per share was the lowest intraday price for Apple since June, 2014. And it compounded a 9% loss from last week.
CEO Tim Cook, in a highly unusual move, sent an email to CNBC host Jim Cramer before the opening bell on Monday stating that Apple's business in China was doing fine. "We have continued to experience strong growth for our business through July and August," Cook wrote. "Growth in iPhone activations has actually accelerated over the past few weeks."
If it had continued, the rout in the prices of publicly-traded tech companies could have had a ripple effect on the valuation of the largest private tech companies, such as Uber, Airbnb and Snapchat. Venture capitalists have bid up the value of the private companies over the past few years, even as the value of most publicly traded peers remained muted. But they might not have been able to ignore further current carnage in the public sector.
Some losses erased
Google, the second-largest public tech stock by market cap, opened down 7%, erased all of that loss by midday only to end down 4%. The search engine giant lost 7% on Thursday and Friday.
Newer technology companies that have benefitted of late from momentum investors hot on growth -- and without as much concern for profits -- were hit harder last week. But they also recovered somewhat on Monday. Streaming video darling Netflix (NFLX) had a crazy day, starting with opening at $88.67, down 15%. At midday, the stock hit $109.63, a gain of 5% from Friday's close. But as stocks weakened again towards the close, Netflix was buffeted again, finishing down 7% at $96.88.
At the lowest point of $85.50 on Monday morning, the shares of CEO Reed Hastings' company were off 34% from an all-time high set back on Aug. 6.
Other big momentum stocks that ended the tumultuous day with losses included Facebook, down 4% on Monday after losing 10% Thursday and Friday. Amazon (AMZN) ended down more than 6% on Monday after a 7% drop last week. Electric carmaker Tesla (TSLA) also lost an additional 5% after dropping 10% Thursday and Friday.
Among older tech names, the losses were slightly muted, as most had been well off for the year before the China mess struck. IBM (IBM) dropped 3% Thursday and Friday and was off another 4% on Monday, Intel (INTC) skidded 6% last week before a loss of just 1% on Monday and Cisco Systems (CSCO) lost 5% last week and 4% more on Monday. Microsoft (MSFT) lost 3% on Monday after dropping 8% last week.
Some smaller capitalization tech stocks, absolutely obliterated in the initial sector slide, also bounced back. Human resources cloud service supplier Workday (WDAY) plunged 13% on Thursday and Friday and but was down only another 3% midday on Monday. Cybersecurity protector FireEye (FEYE) fell 16% on the last two days of the week and another 2% on Monday.
