Tech wreck: Wall Street plunges as Apple, trade concerns worry investors

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Tech wreck: Wall Street plunges as Apple, trade concerns worry investors

By Caroline Valetkevitch
Updated

The Nasdaq has slumped nearly 3 per cent and the Dow and S&P fell more than 1 per cent as investors pulled out of Apple and internet shares, while conflicting signals over the US-China trade dispute added to caution.

Wall Street has fallen across the board, with tech companies leading the way.

Wall Street has fallen across the board, with tech companies leading the way. Credit: Richard Drew

Shares of Apple Inc fell 3.5 per cent after the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September.

The iPhone maker's stock is now down about 20 per cent from a record high in October following a disappointing holiday quarter sales forecast and weak outlooks from several suppliers. The S&P 500 technology index, down 3.5 per cent, led sector losses.

Other market leaders - including the 'FANG' stocks - also fell sharply, underscoring the view that their leadership was on shaky ground. Shares of Facebook were down 5.1 per cent, Amazon.com was down 4.3 per cent, Netflix was down 4.9 per cent and Alphabet fell 3.4 per cent.

The S&P 500 index fell 45 points, or 1.7 per cent, to 2,690. The Dow lost 395 points, or 1.6 per cent, to 25,017. It was down as much as 512 earlier. The Nasdaq composite lost 219 points, or 3 per cent, to 7,028.

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It sets up the Australian sharemarket for a negative start to the day, with futures pointing to a 18-point drop at the open.

Since the FANG outperformance run peaked on August 30, the group has underperformed the S&P 500 by 16.25 per cent. That is their worst underperformance since the first half of 2014 when they underperformed by around 20 per cent.

"You're seeing that rotation away from tech. Certainly the indexes are much more growth-oriented because of the sheer size of those companies now, and they dominate the indexes. You're going to have more underperformance of the growth names," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

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Over the weekend, Asia-Pacific leaders meeting in Papua New Guinea failed to agree on a communique for the first time, with US-China trade worries on the forefront.

US Vice President Mike Pence said in a blunt speech on Saturday the United States will not back down from its trade dispute with China unless Beijing bows to US demands, dampening Friday's trade optimism that was fuelled by comments from President Donald Trump.

The Nasdaq lost 3 per cent on the day.

The Nasdaq lost 3 per cent on the day.Credit: AP

Comments by New York Fed President John Williams on Monday that the US central bank is pushing ahead with gradual rate-hike plans next month as it marches toward a more normal policy stance may have added pressure to stocks.

Some investors questioned whether the Fed will be able to continue raising interest rates, possibly harming growth.

Richard Clarida, the Fed's newly appointed vice chair, said on Friday that US rates are nearing Fed estimates of a neutral rate, which "makes sense."

Shares of Apple suppliers were also hit, including Lumentum Holdings Inc, Universal Display Corp, Cirrus Logic Inc and Skyworks Solutions Inc.

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The Philadelphia SE Semiconductor index, which also includes some Apple suppliers, dropped 3.1 per cent, extending losses from the previous session.

Trading volumes were thin in a holiday-shortened week ahead of Thanksgiving on Thursday and a shorter session on Friday which brings slight volatility to markets, traders said.

Declining issues outnumbered advancing ones on the NYSE by a 2.70-to-1 ratio; on Nasdaq, a 2.88-to-1 ratio favoured decliners.

The S&P 500 posted 26 new 52-week highs and 17 new lows; the Nasdaq Composite recorded 16 new highs and 140 new lows.

Reuters

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