Tech giants slide, pulling stock market sharply lower
A broad sell-off in technology companies pulled U.S. stocks sharply lower Monday, knocking more than 600 points off the Dow Jones Industrial Average.
The wave of selling snared big names, including Apple, Amazon and Goldman Sachs. Banks, consumer-focused companies, and media and communications stocks all took heavy losses. Crude oil prices fell, erasing early gains and extending a losing streak to 11 days.
The tech stock tumble came followed an analyst report that suggested Apple significantly cut back orders from one of its suppliers. That, in turn, weighed on chipmakers.
“With the news out of the Apple supplier this morning, you have the market overall questioning the growth trajectory as we look out to 2019,” said Lindsey Bell, investment strategist at CFRA. “We continue to like tech going into next year, but we think it could be a little bit of a rocky period for the group as we continue through the last two months of the year.”
The market’s slide came after a two-week winning streak.
The S&P 500 index dropped 54.79 points, or 2 percent, to 2,726.22. The Dow fell 602.12 points, or 2.3 percent, to 25,387.18. It was down briefly by 648 points.
The Nasdaq composite slid 206.03 points, or 2.8 percent, to 7,200.87. The Russell 2000 index of smaller companies gave up 30.70 points, or 2 percent, to 1,518.79.
Bond trading was closed for Veterans Day. Stocks in Europe also suffered losses.
Apple tumbled 5 percent to $194.17 after Wells Fargo analysts said the iPhone maker is the unnamed customer that optical communications company Lumentum Holdings said was significantly reducing orders. Shares in Lumentum plunged 33 percent to $37.50.
Several chipmakers also fell. Advanced Micro Devices gave up 9.5 percent to $19.03, while Nvidia lost 7.8 percent to $189.54. Micron Technology gave up 4.3 percent to $37.44.
Amazon slid 4.4 percent to $1,636.85.
Banks and other financial companies also took heavy losses Tuesday. Goldman Sachs slid 7.5 percent to $206.05.
“Expectations are really that
the deregulation process that has benefited banks up to this point is going to be slowed down with the Democrats in charge,” Bell said.
Stocks appeared to have regained their footing after a skid in October snapped a six-month string of gains for the S&P 500. Stocks rallied last week after the U.S. midterm elections turned out largely as investors expected, with a divided Congress promising legislative gridlock in Washington the next couple of years.
While the market has typically thrived in periods of divided government, investors continue to grapple with uncertainty over the U.S.-China trade dispute and the potential impact of increased oversight of Corporate America by Democrats, who will be taking over leadership in the House of Representatives in January.
In addition, some companies have recently reported third-quarter earnings and outlooks that have stoked investors’ worries about the future growth of corporate profits.
Benchmark U.S. crude gave up an early gain, sliding 0.4 percent to settle at $59.93 per barrel in New York.