Analysts Cut Apple Stock to 700 Kuna

On Wall Street, stock indices fell on Friday for the second consecutive day as investors are cautious due to the dangers of the ‘fiscal cliff’, which could push the U.S. economy into recession.

The Dow Jones index weakened by 35 points, or 0.27 percent, to 13,135 points, while the S&P 500 slid 0.41 percent to 1,413 points, and the Nasdaq index fell 0.70 percent to 2,971 points.

Among the biggest losers yesterday was Apple stock, which dropped by 3.8 percent after UBS analysts cut the target price for the stock from $780 to $700, and news from China indicated a lukewarm reception for the iPhone 5 in that market.

From the beginning of the year until September, the price of shares of this tech giant and the largest U.S. company by market capitalization had risen sharply. However, in recent months it has been falling as investors cash in on profits, considering that capital gains tax could increase at the beginning of next year.

The decline in Apple has put the most pressure on the Nasdaq index, in which this stock has a significant weight, and the S&P technology sector index also fell significantly by 1 percent. This did not affect the Dow Jones as Apple stock is not part of that index.

While the technology sector weakened, the mining sector strengthened yesterday. The S&P index for that sector jumped 0.9 percent, thanks to rising commodity prices, following news of strengthening in the Chinese economy, the world’s largest consumer of raw materials.

And in negotiations between Republicans and Democrats on reducing the budget deficit, there is still no progress. U.S. President Barack Obama and John Boehner reportedly had a very open discussion on Thursday about options to avoid the ‘fiscal cliff’.

However, it seems there is no movement, and if Republicans and Democrats do not find a better solution in the next two weeks, budget expenditures will automatically be reduced and taxes increased at the beginning of next year, which could harm consumption and push the U.S. economy into recession.

“We are facing uncertainty… and this will continue until the end of the year. Because of this, investors are cautious, and the market is struggling,” says Larry Peruzzi, an analyst at Cabrera Capital Markets.

Throughout this week, the Dow Jones and Nasdaq indices weakened by 0.2 percent, while the S&P 500 slid by 0.3 percent.

European markets traded cautiously yesterday. The London FTSE index weakened by 0.13 percent to 5,921 points, while the Paris CAC remained unchanged at 3,643 points. The Frankfurt DAX, on the other hand, strengthened by 0.19 percent to 7,596 points.