The Nasdaq 100 has seen a correction which may expand over the next week.
NAS100 – Daily Chart
The Nasdaq appears to be seeing some year-end profit-taking after a strong year in 2023. The index is moving back toward the 16,000 level where stronger resistance lies.
Shares of Apple fell 4% this week after Barclays analysts downgraded the stock to an “underweight” rating from “equal weight”. The bank’s analysts said disappointing iPhone 15 sales, particularly in China, was the cause of the change in tone.
“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables. The continued period of weak results coupled with the multiple expansion is not sustainable”.
The downgrade came after slower demand for the latest iPhone, with customers having less incentive to upgrade due to limited new features. The next-generation iPhone 16 which is expected this year, will also have minimal upgrades. Apple’s services business is another headwind, due to heightened regulatory scrutiny.
The news followed a tough few weeks for Apple, after it was forced to halt sales on its Watch series due to a patent lawsuit. The company got a reprieve but awaits a January ruling.
The Nasdaq was also hurt after Tesla posted its latest deliveries for the fourth quarter. The company posted record deliveries but missed on its annual target of 2 million vehicles. Chinese domestic rival BYD was also seen beating Tesla’s quarterly performance for the first time.
Some analysts are still positive on US tech with Goldman Sachs’ chief US equity strategist David Kostin expecting the big 7 stocks that ruled 2023 to continue their gains in 2024.
“Our baseline forecast suggests that in 2024 the mega-cap tech stocks will continue to outperform (the rest of the market)”. Some are also hopeful that AI can continue its advance and lead to expanding profits at the largest tech firms. Deutsche Bank and Bank of America are also expecting stocks to continue higher in the year ahead.