Northwest Arkansas Democrat-Gazette
Struggles of banks, tech firms send stocks lower
U.S. stock indexes closed with mostly modest losses Tuesday as the market gave up some of its solid gains from the past two weeks.
Banks and technology stocks accounted for most of the decline. The Nasdaq eked out a tiny gain that was good enough to nudge it to another record high.
The S&P 500 index fell 9.87 points, or 0.3%, to 3,370.29. The benchmark index remains just below its record high set on Friday.
The Dow Jones Industrial Average slid 165.89 points, or 0.6%, to 29,232.19. It had been down as many as 281 points. The Nasdaq recovered from an early slide, inching up 1.57 points, or less than 0.1%, to 9,732.74.
The Russell 2000 index of smaller-company stocks fell 4.06 points, or 0.2%, to 1,683.52.
The selling, which lost some of its momentum in the final hour of trading, came as investors weighed the effect the virus outbreak in China is having on Apple and other major companies.
The tech giant said revenue will fall short of previous forecasts in the fiscal second quarter because production has been curtailed and consumer demand for iPhones has slowed in China. Apple’s stores there are either closed or operating on reduced hours.
The iPhone-maker is among the most notable companies to warn investors that the virus will hurt its financial performance. Medical device-maker Medtronic also warned Tuesday that the virus outbreak will affect its quarterly results.
“The longer this goes on, the greater the focus is going to be on how much is this going to impact companies like Apple, which is considered not only a bellwether in tech, but a bellwether for the market overall,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab.
European and Asian markets declined. Bond prices rose. The yield on the 10-year Treasury fell to 1.56% from 1.58% late Friday.
As in recent weeks, traders reacted to the latest developments in the viral outbreak that began in China. Most of the cases and deaths have occurred in that country.
Businesses worldwide are increasingly caught in the economic fallout from the outbreak. The Beijing auto show, the industry’s biggest global event of the year, is being postponed indefinitely from its April date.
Apple and Medtronic are only the latest notable examples of companies that have warned investors about the economic effect of the outbreak on their financial performance.
Technology and health care companies have been the most vocal about mentioning the new coronavirus in their earnings conference calls, according to FactSet.
While Apple’s projected revenue miss took Wall Street by surprise, some analysts played down the longterm effect of the iPhone production delay.
Apple shares fell 1.8%, while Medtronic slid 4%.
Technology stocks accounted for a big slice of the selling Tuesday. Several chipmakers, which rely heavily on China for sales and supplies, fell. Intel dropped 1.7%, and Broadcom slid 2.2%.
Banks declined. HSBC said it will cut 35,000 jobs and shed $100 billion in assets. Its shares dropped 5.6%. Wells Fargo slid 2.5%.
Energy stocks also fell. Schlumberger dropped 2.2%.
Communication services stocks and utilities held up better than most of the market. T-Mobile US rose 3.5%, and Xcel Energy rose 1.3%.
Traders continued to assess company earnings reports. Advance Auto Parts climbed 6.2% after the auto-parts supplier’s results topped Wall Street’s forecasts. Conagra Brands dropped 6.1% after the food producer cut its fiscal 2020 profit and revenue forecasts, citing unexpectedly weak consumption.
Information for this article was contributed by Damian J. Troise of The Associated Press.