Wall Street opened the week under heavy pressure on November 19, 2018, as a steep drop in Apple shares and renewed anxiety over the U.S.-China trade dispute pushed major indexes lower.
The Dow Jones Industrial Average fell more than 400 points in afternoon trading, with the tech sector leading the decline after Apple Inc lost 3.8 percent. The move followed a Wall Street Journal report that the company had reduced production orders in recent weeks for all three iPhone models launched in September.
Apple’s slide added to a broader pullback that has already erased much of the stock’s recent strength. The iPhone maker, a major driver of the long-running equity rally, was down nearly 20 percent from its October record high after a disappointing holiday-quarter sales forecast and weak guidance from several suppliers.
Technology stocks fell 3.3 percent, making the sector the worst performer among the 11 major S&P sectors in negative territory. Consumer discretionary shares dropped 2.1 percent, while communication services lost 2.7 percent.
“Without the FANG leadership, including Apple, the market is going to struggle,” said Peter Cecchini, managing director and chief market strategist at Cantor Fitzgerald in New York.
Trading was also thin because the week was shortened by Thanksgiving, with markets facing a holiday schedule that included a shorter session on Friday. That lighter volume, traders said, can make price swings more pronounced.
Apple suppliers were pulled lower as well. Lumentum Holdings Inc, Universal Display Corp, Cirrus Logic Inc and Skyworks Solutions Inc fell between 2.6 percent and 6 percent. The broader FAANG group also weakened, with Facebook Inc, Amazon.com Inc, Netflix Inc and Alphabet Inc each down between 3 percent and 4.8 percent.
The Philadelphia SE Semiconductor index slipped 2.6 percent, extending losses from the previous session after Nvidia Corp issued an underwhelming forecast that weighed on the sector.
“There’s been a loss of trust in managements at Apple and Nvidia - both overpromised and underdelivered... Rarely do you see these kind of moves in a holiday week,” said Doug Biben, founder and portfolio manager at BCM in Los Angeles.
At 12:59 p.m. EDT, the Dow Jones Industrial Average was down 392.90 points, or 1.55 percent, at 25,020.32. The S&P 500 had fallen 40.74 points, or 1.49 percent, to 2,695.53, while the Nasdaq Composite was down 185.94 points, or 2.57 percent, at 7,061.93.
Trade worries intensified after Asia-Pacific leaders failed to agree on a communique at a meeting in Papua New Guinea, the first time that had happened, with U.S.-China tensions dominating the talks. U.S. Vice President Mike Pence added to the pressure on Saturday by saying the United States would not back down unless Beijing met Washington’s demands, undercutting the optimism that had followed President Donald Trump’s comments on Friday.
Trade-sensitive names also came under selling pressure. Boeing Co fell 4.8 percent and Caterpillar Inc lost 2.5 percent.
Declining stocks outnumbered advancers by 2.46-to-1 on the NYSE and 2.59-to-1 on the Nasdaq. The S&P index logged 26 new 52-week highs and 16 new lows, while the Nasdaq recorded 16 new highs and 123 new lows.
Reporting by Medha Singh in Bengaluru. Additional reporting by Sruthi Shankar and Jennifer Ablan; Editing by Anil D'Silva and Arun Koyyur.
