Apple Sours Technology Sector's Week as Earnings Anxiety Mounts

(Bloomberg) -- For all the hubbub surrounding tech earnings, a company that hasn’t yet reported is the biggest drag on the sector for a second straight week.

Yep, Apple -- and not earnings eggs laid by Alphabet or PayPal or even EBay -- is the primary reason the S&P 500 Information Technology sector has been in the red for the five days, as concern mounts that the iPhone maker will disappoint an already jittery market when it reports May 1.

Investors have been souring on the tech giant ever since Taiwan Semiconductor Manufacturing Co. issued a disappointing outlook last week, heightening angst that smartphone demand has cooled. That worry reached a fever pitch Friday after Goldman Sachs’s Rod Hall said his research suggests iPhone output numbers in June may be even worse than the 40 million forecast he made last month.

“This weakness calls into question Apple’s lineup this fall in terms of specifically how many new LCD phones to launch and how to price them,” Hall wrote in a note. “Bigger picture we believe Apple faces a critical strategic decision -- whether to move down market with the iPhone more aggressively and take lower margins or remain at the high end of the market with higher margins and lower unit volume.”

Apple’s 2.3 percent slide this week is also partly due to STMicroelectronics. The chipmaker that gets about 10 percent of its revenue from Apple warned about near-term weakness in the global smartphone market.

Apple is down 4.2 percent this year, the worst performer among the FANG group of stocks.

©2018 Bloomberg L.P.