U.S. Stocks Slide, Dragged Lower by Tech Sector
Decline in tech shares overshadows a rebound in the energy sector; Dow industrials fall more than 400 points
By Donato Paolo Mancini and Akane Otani
Updated Nov. 12, 2018 12:07 p.m. ET
The blue-chip index of 30 stocks lost 406 points, or 1.6%, to 25583 after posting its biggest one-week gain since March. The S&P 500 lost 1.5% and the Nasdaq Composite dropped 2.7%.
Monday’s selling began in the technology sector, then morphed into a broad rout that dragged lower everything from oil conglomerates to manufacturers to entertainment firms. It was the latest setback for the stock market, which has struggled to break out to new highs since the S&P 500 capped off its worst month in more than seven years.
Apple shares fell Monday after one of its suppliers, Lumentum, cuts it earnings and revenue outlook.
Apple shares fell Monday after one of its suppliers, Lumentum, cuts it earnings and revenue outlook. Photo: shannon stapleton/Reuters
Investors were left scrambling for explanations. Some pinned the retreat to a broad retreat from risky assets that they say look increasingly vulnerable to a reversal following a yearslong rally. Others blamed nervousness around the future of fast-growing chip makers, social media firms and consumer device giants that had driven much of the bull market’s gains earlier in the year.
Apple fell 4.4% after one of its suppliers, Lumentum, cut its earnings and revenue outlook—triggering fresh worries about demand for the company’s iPhone line. The fall of companies like Apple, among others, has often preceded broader pullbacks this year as investors have questioned what sectors can ride higher as the global economy shows more signs of slowing.
“People tend to ask what’s Amazon doing today? What’s Apple doing today?” said Robert Pavlik, senior portfolio manager and chief investment strategist at SlateStone Wealth. And when those technology giants, among others, falter, investors tend to become increasingly nervous about how far the broader market can rise, Mr. Pavlik added.
Company-specific worries dragged individual stocks lower, too.
Goldman Sachs tumbled 6.4%, wiping out nearly 100 points from the Dow industrials, as concerns grew over the bank’s interaction with a financier charged with stealing billions of dollars from the 1Malaysia Development Bhd. investment fund. General Electric dropped 5% and headed for its fourth consecutive daily decline after comments from the firm’s chief executive on CNBC failed to assuage investors’ worries about the future of the industrial conglomerate.
As stocks slumped, investors flocked to shares of dividend-paying sectors that tend to perform well during periods of heightened volatility. The utility and real-estate sectors rose 0.6% and 0.5% apiece, the only two groups in the S&P 500 to post gains so far in the day.
Those drops overshadowed a rebound in oil prices, which briefly brought the energy sector higher after Saudi Arabia said it would slash exports and the Organization of the Petroleum Exporting Countries considered a collective production cut.