By Kristen Scholer
The Nasdaq Composite Index's longest winning streak in more than
five years ended with a whimper at the hands of a surprising
culprit: a pullback in the world's most valuable company, Apple
Inc.
Shares of Apple slumped 2.6% after Google Inc. on Wednesday
introduced technology to encourage companies and employees to use
Android smartphones for work. Dubbed Android for Work, the
initiative was first announced in June 2014.
Investors seemed to take Wednesday's news from Google, which
also announced a security-software partnership with struggling
Canadian phone maker BlackBerry Ltd., as a shot across the bow of
Apple, the world's most profitable company in its latest quarter
thanks to sales of the iPhone and related devices.
Apple's shares declined for their second straight day and just
the fourth time this month, posting their first back-to-back
declines since mid-January. Apple is the largest Nasdaq component,
at 10% of the index. BlackBerry rose 24 cents, or 2.3%, to $10.51,
on the Nasdaq Stock Market.
The pullback left the Nasdaq index down 0.98 point, at 4967.14,
ending a 10-day winning streak that was the index's longest since
July 2009.
Gains in Apple have propelled the Nasdaq to levels last seen in
March 2000 at the peak of the dot-com boom. The index has outpaced
the Dow Jones Industrial Average and the S&P 500 this year,
thanks in part to a 17% gain in Apple.
The decline frustrated for another day the march to Nasdaq 5000
that has captivated many traders and investors this month, though
it didn't dent the belief held by many market participants that the
index is on the cusp of surpassing its record hit 15 years ago.
"People were taking some profits in Apple and rotating into
other things, " said John Spallanzani, chief macroeconomic
strategist at brokerage GFI Group Inc. He noted share-price gains
at Facebook Inc., Google and Alibaba Group Holding Ltd. "I do think
we're going to 5000. It's just a matter of time. Hopefully we'll do
it by the end of the month."
Wednesday's pullback began with Google's announcement at 2:30
p.m. EST. Apple tumbled about $2, or 1%, and the Nasdaq index shed
roughly 17 points, or 0.3%, in a matter of 10 minutes. The S&P,
in which Apple accounts for 4% of index value, also declined, but
the Dow rose modestly on the day. Apple isn't part of the Dow.
The drop in Apple shares took the Cupertino, Calif., firm down
$3.38, to $128.79. The decline reduced the company's market value
to $770 billion, a day after Apple hit its all-time high of $133.60
a share.
Google hopes Android for Work, which will operate for the four
most recent versions of its operating system, dating back to a 2011
release, will help corporations overcome fears about Android's
security and give them more control.
About half of information workers world-wide say Android devices
are their primary smartphones, and 31% cite iPhones, according to
Forrester Research surveys last year. In 2012 research, 37% of
respondents said Android devices were their primary smartphones,
and 34% said it was the iPhone.
Apple posted an $18 billion profit in the latest period, and few
investors seem inclined to believe that the Google moves Wednesday
pose a serious threat to a company that has emerged as arguably the
most powerful force in financial markets.
Similarly, many investors believe the ingredients that have
propelled the Nasdaq's rise over the past year will continue
percolating. They point to an expanding U.S. economy, a sense among
many analysts and traders that the worst threats to global growth
in Europe and China have passed, and monetary policy from central
banks such as the Bank of Japan and the European Central Bank. The
Federal Reserve is expected to raise short-term interest rates this
year, but, even so, policy is expected to remain friendly to asset
prices, with near-term rates near zero.
"I don't read too much into the market's drop," said Michael
Purves, chief market strategist at brokerage Weeden & Co. "It's
been gurgling at fresh highs over the past few weeks."
Rolfe Winkler contributed to this article.
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