Technology stocks take a hit in U.S.

Dow Jones drops 602 points as investors shy from high flyers

Stocks dropped Monday, giving back a slice of their recent gains as investors dumped shares in some of the large technology companies that hold outsize sway over market indexes.

The Nasdaq composite was one of the hardest-hit among the major bench marks. The technology-heavy index was down 2.8 per cent. The S&P 500 fell 2 per cent, and the Dow Jones industrial average was down 602.12 points or 2.3 per cent, to 25,387.18.

The S&P/TSX composite index closed down118.04 points to 15,156.40 after hitting a high of 15,263.74. Apple’s shares declined 5 per cent after one of its suppliers, Lumentum, slashed its fiscal outlook for the current quarter and said it had received a request from one of its largest customers to reduce shipments. The company, whose shares plummeted over 30 per cent, did not identify Apple in its warning but Apple is Lumentum’s largest customer, generating roughly one-third of the company’s revenue, according to a regulatory filing.

Apple’s stumble seemed to weigh on other previously highflying technology companies. Amazon shares dropped 4.4 per cent, and Facebook fell 2.4 per cent. The social network was briefly offline for many users Monday afternoon.

Alphabet, the parent company of Google, declined 2.6 per cent, and Netflix stock fell more than 3 per cent. The slump in technology shares Monday was a reminder of the ugly drop stocks suffered in October. Worried about rising interest rates, trade tensions and a potential peak in profits, investors briefly pushed the market down nearly 10 per cent below its late-September peak and into negative territory for the year.

Apple remains a key concern. The company has a market value above $900 billion, so moves in the share price have an outsize effect on stock indexes —like the S&P 500 — that are weighted by market size.

Apple’s recent stumble suggests that some investors are questioning the ability of major tech companies to continue to carry the broader markets.