Wall Street watched in horror yesterday as the value of shares in the industry darling, Apple shares plummeted faster than a free fall parachuting team of elephants which had forgotten to pack the key ingredient of their act.
Apple shares tumbled shortly after the start of trading on Monday, briefly suffering their largest price drop in at least three months on an unusual spike in volume.
More than 6.7 million shares trading in a one-minute stretch, the heaviest minute of trading in Apple since October 29.
The stock lost over three percent in that minute, falling as much as 6.4 percent to $111.27. At midafternoon, it was down three percent to $115.45. The Tame Apple press did its best to insist that the share drop was nothing to do with Apple. They claimed it was all down to algorithmic trading which put Apple on sell.
Reuters was a bit huffy that computers had dared to say its favourite computer company was worth less than it was in the morning. The HFT has been criticised for affecting the trading of stocks by sending in numerous trade quotes that slow quote activity – without filling the trades when shares fall, it wrote.
However, other analysts disagreed. Bill Harts, chief executive officer of Modern Markets Initiative, an advocate of high-speed electronic markets said that determining the cause of the decline was not so simple. “The fact is we don’t yet know what caused the drop, and blaming it on HFT is misleading.”
Morgan Stanley strategists dropped Apple’s weighting in their strategic portfolio to three percent from four percent in an equity outlook note released Monday, but traders said the swiftness of the decline was too dramatic to be attributed solely to the note, which was released before trading opened.
It might have been the Morgan Stanley news that rather stimulated the event, but not enough to cause such a decline, analysts claim.
