On the floor of the New York Exchange.(Photo: Spencer Platt, Getty Images)
Stocks opened flat to mixed
Thursday as negotiations continued in Washington over avoiding the tax
increases and spending cuts of the "fiscal cliff."
On Wednesday, Apple stock dragged down the Nasdaq composite index.
once the stock market's darling, fell another 1.97% Thursday, It
dropped 6.4% Wednesday to close at $538.79. The electronics maker is
down 24% from its September high.
If you bought a technology ETF
to diversify your tech holdings, though, you may have noticed that
Apple's woes are yours as well. And that's because Apple is such a big
slice of the largest technology ETFs.
Powershares QQQ, Qubes, as they're called, have 18.8% of their assets in Apple, according to Morningstar. QQQ fell 1.1% Wednesday.
Technology Sector Select SPDR has 19.2% of its assets in Apple. It fell 1.0% Wednesday.
Vanguard Information Technology ETF, 20.5% in Apple. It fell 1.0% Wednesday.
IShares Dow Jones U.S. Techology has 22.9% in Apple. The fund fell 1.3% Wednesday.
funds' huge positions in Apple point to a problem with indexing in a
stock sector, especially when the index gives greater weight to stocks
with larger market capitalization - stock price multiplied by shares
Even after Wednesday, Apple is a behemoth, weighing
in at $506.8 billion. Rival Microsoft, the second-largest holding in
QQQ, has a market cap of $224.5 billion. The tech sector is so top-heavy
by cap weighting that the five largest members of the Nasdaq 100 index
are 41.5% of the index. But if you buy a tech ETF, your biggest slice by
far is Apple.