US technology stocks suffered renewed losses with the Nasdaq Composite index falling back into correction territory as Apple extended its fall over the past two sessions to more than 8 per cent following reports the company had asked suppliers of its new iPhone model not to increase production. Dimming hopes of a U.S.-China trade agreement, a lackluster reading on the Chinese economy and a tech-led selloff on Wall Street on Friday contributed to Monday’s subdued trading, after stocks last week mostly rebounded from an October rout.
While S&P 500 companies have broadly reported more positive earnings surprises than they would in an average quarter, corporate comments about rising costs, the impact of tariffs and next year’s growth outlook have unnerved some investors, contributing to recent market swings. The Nasdaq Composite lost 0.8% Monday, hurt by a slide in everything from social media companies to chip makers and software developers. The S&P 500 added 0.3% and the Dow Jones Industrial Average rose 153 points, or 0.6%, to 25427, boosted by gains in Chevron Corp. and International Business Machines Corp.
Apple, whose guidance for the holiday quarter disappointed investors last week, extended a rout that has shaved tens of billions of dollars off its market capitalization. Shares were last down 3.1% to $201.11, bringing their monthly losses to 8.1%. Other technology firms also retreated, with Amazon.com Inc. down 3.2%, Alphabet Inc. losing 2.5% and Nvidia Corp. falling 2.7%.
Meanwhile, shares of financial companies rallied, with Class A shares of Berkshire Hathaway Inc. adding 5.2% after the firm said over the weekend that it had repurchased its own shares for the first time since 2012. As the week progresses, analysts say they will be keeping an eye on the midterm elections, which could spark fresh volatility as investors parse through the implications for U.S. fiscal and trade policy, as well as the Federal Reserve’s meeting.
Broader equity indices on Wall Street made a steadier start to the week — helped by gains in the energy and financial sectors — although the mood remained cautious against a backdrop of impending midterm elections and uncertainty over the US-China trade dispute. Energy stocks pushed higher as crude prices rallied after last week’s steep falls when the US formally imposed sanctions on Iran but gave eight countries temporary waivers allowing them to continue buying oil from Tehran. Across the Atlantic, Italian bank stocks came under pressure after Goldman Sachs downgraded some of the country’s biggest lenders.
The sector was also hit by an early sell-off for Italian bonds as the row over the country’s proposed 2019 budget. EU finance ministers urged Rome to bow to calls from Brussels to revise the draft budget plans, which breach spending rules. It has until November 13 to submit a fresh proposal. There was some broadly encouraging news on the US economy with the Institute for Supply Management’s October non-manufacturing index easing from a 21-year high but still coming in slightly ahead of expectations.
Andrew Hunter at Capital Economics noted that recent ISM data had increasingly been at odds with other survey evidence. “With the boost from fiscal stimulus now fading, we . . . expect a further slowdown in GDP growth in the fourth quarter,” he said.
The data failed to lift either the dollar or Treasury yields. Sterling held above the $1.30 level against the dollar — well off last week’s low just above $1.27 — as the markets took heart from reports that the UK was near to reaching a deal to leave the EU, which would include an all-UK customs arrangement.
Equities. By midday in New York, the Nasdaq Composite was down 1.1 per cent — leaving it more than 10 per cent down from the record high it reached in late August, the usual definition of a correction. Apple shares were down 3.5 per cent, for a two day drop of 8,5 per cent. The stock briefly fell below $200 for the first time in three months. The S&P 500 was up 0.1 per cent at 2,726, with the energy sector up 1 per cent and financials 1.4 per cent higher. The Dow Jones Industrial Average was up 0.4 per cent. In Europe, the pan-regional Stoxx 600 index and the Xetra Dax in Frankfurt both shed 0.2 per cent, although London’s FTSE 100 inched 0.1 per cent higher, even as the pound rose against the dollar.
Forex and fixed income. The dollar index was down 0.1 per cent at 96.43 as the euro inched 0.1 per cent higher to $1.1402 and the greenback traded flat against the yen at ¥113.19. Sterling was up 0.4 per cent at $1.3025, after earlier hitting a two-week high of $1.3062. The yield on Italy’s 2-year debt rose as high as 1.23 per cent before closing at 1.13 per cent, up 2 basis points on the day. The 10-year yield ended 1bp higher at 3.32 per cent after touching 3.39 per cent. The 10-year US Treasury yield was down 2bp at 3.20 per cent, with the two year yield flat at 2.91 per cent.
Commodities. Oil prices rebounded from last week’s tumble, with Brent crude, the international benchmark, up 0.7 per cent at $73.37 a barrel and US West Texas Intermediate regained 0.5 per cent higher to $63.45. Gold was down $2 at $1,230 per ounce.
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