Tech giants slide, pulling U.S. stocks down
U.S. markets dropped Monday on renewed fears that the tech sector has run out of steam.
The Dow Jones Industrial Average dropped 601 points, or 2.3 percent, to 25,387.18 in the session.
The blue-chip barometer was dragged lower by the tech-heavy Nasdaq composite index, which tanked 2.8 percent on the weak technology shares. More than 70 percent of the tech sector is in correction territory — meaning the share prices are more than 10 percent off their peak.
The S&P 500 was off 2 percent. Of its eleven sectors, real state was the only one that ended trading in the black Monday.
The Nasdaq has been in a pressure cooker for weeks as technology, particularly the so-called FAANG companies — Facebook, Amazon, Apple, Netflix and Google-parent Alphabet — has hit turbulence with investors.
“It’s mostly Apple,” said Ed Yardeni, president of Yardeni Research. “More selling of the FAANG stocks. The stocks that can do no wrong now are tripping up. They were leading the market higher and the market narrowed over the past year as the big-cap tech names led the way up. And now a lot of the air is coming out of them.”
Apple shares slid Monday after a key supplier disclosed that one of its largest customers had reduced its request for shipments. Analysts identified the customer as Apple.
Luke Tilley, chief economist at Wilmington Trust Investment Advisors, attributed the slide in technology shares to the outsize gains the sector had this year.
“It stood the most to lose when we have one of these textbook market corrections,” Tilley said.
Apple was down 4.8 percent after posting a strong quarter. But analysts are worried that sales of the iPhone and Mac are slowing. Online retail giant Amazon.com was down 4.4 percent. Netflix was off 3.1 percent, Alphabet was down 2.6 percent, and Facebook fell 2.4 percent.
Goldman Sachs dropped nearly 8 percent. A Bloomberg report Monday said Malaysia is seeking up to $600 million in refunds for the fees it paid the U.S. investment bank for three bond deals that are at the center of a scandal.
Oil prices climbed Monday morning on news that OPEC may cut daily oil production to help boost prices. By late afternoon, they’d tipped lower again, extending losses that have stretched over recent weeks.
Brent Crude was selling for $69.30 per barrel, down 1.9 percent from Friday. West Texas Intermediate oil was down 1.3 percent at $59.03.
Saudi Arabia, the de facto leader of OPEC and a key oil producer at more than 10 million barrels per day, is the key to getting oil prices higher.
Saudi Arabia wants to keep a robust oil price in the $80 to $90 per barrel range.
President Donald Trump renewed his pressure on Saudi Arabia and OPEC to keep supplies flowing and the price of oil at reasonable levels: “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!”