U.S. stocks plummeted Monday, with the largest technology companies leading the way lower, as investor pessimism about escalating trade tensions between the Trump Administration and China added to concerns about new regulation coming for the industry. The dollar dipped and Treasuries gained for a fifth straight session.
All major American benchmarks were down more than 1.5 percent. The Nasdaq 100 Index plunged around 3 percent on renewed concern that trade fights will tamp down global demand and disrupt supply chains for major technology companies that have carried the bull market for almost 10 years. The biggest drop in homebuilder sentiment in more than four years hammered the housing sector. Crude held above $56 a barrel as energy stocks rebounded.
“The internals of the market itself have become increasingly defensive,” Richard Ross, Evercore ISI head of technical analysis, said on Bloomberg TV. “We’ve seen some erosion across key sectors, like technology, while at the same time, the macro backdrop — crude, credit, currencies — all trending in the wrong direction, after providing a tailwind for almost the entirety of this bull move, which commenced in late 2016.”
Here are some of the key moves:
Apple Inc. sank following reports that it had cut production orders for the three iPhone models it unveiled in September. Facebook Inc. dropped as its public image remains under pressure. Snap Inc. and Twitter Inc. tumbled too as social media shares were broadly punished.
Nvidia Corp.’s two-day plunge reached 25 percent after its disappointing earnings, as chipmaker shares remained in a tailspin.
Salesforce.com fell more than 7 percent, the most since February 2016. The SPDR S&P Homebuilders ETF reversed an earlier loss following the housing sentiment report to trade slightly higher.
“You’re seeing weakness in semiconductors because of Nvidia’s weak earnings that were released last week,” said Ryan Nauman, market strategist at Informa Financial Intelligence.
“Facebook is having some more issues with potentially covering up the Russia hack in the 2016 election. Apple, they’re getting downgraded based on demand. A lot of companies and analysts are concerned that the demand for the iPhone has decreased. The trade concern isn’t helping Apple much either with the supply chain.”
Investors are reassessing markets after several weeks of volatility spurred by fears of trade conflicts The Asia-Pacific Economic Cooperation failed to agree on a joint statement for the first time in its history, and U.S. Vice President Mike Pence attacked China at a weekend summit, quashing optimism that relations would improve at Group-of-20 meetings starting next week. In addition, rising U.S. interest rates are pushing up financing costs and threatening global growth.
“Any margin for safety with global growth rates is gone,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. “Now we’re going into a period of slow growth. We’re in no-man’s land — sitting, stuck in a slow growing, slow inflationary environment.”
In Europe, the Stoxx 600 Index fell slightly following a plunge in Renault SA following misconduct allegations against the carmaker’s leader, Carlos Ghosn. Equities posted modest increases in Tokyo, Hong Kong, Shanghai and Taiwan. European bonds mostly edged lower, with Italian securities erasing an earlier gain made after Deputy Premier Luigi Di Maio said his government is ready for dialog with the European Commission over the country’s budget.
The pound fluctuated as Theresa May appealed to business leaders to help deliver her Brexit deal and Gibraltar emerged as a fresh sticking point. Elsewhere, the Australian and New Zealand currencies slipped after Pence’s remarks. Bitcoin dropped below $5,000 for the first time since October 2017.
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Bank of England Governor Mark Carney appears before parliament on Tuesday. It’s a shortened trading week because of the Thanksgiving holiday in the U.S. on Thursday. In addition, Black Friday, the day after Thanksgiving, marks the traditional start to the U.S. holiday shopping season.
These are the main moves in markets:
The S&P 500 Index was down 1.7 percent as of 1:15 p.m. in New York, while the Nasdaq 100 sank 3.1 percent. The Stoxx Europe 600 Index dipped 0.3 percent. The U.K.’s FTSE 100 Index gained 0.1 percent. The MSCI All-Country World Index dropped 1 percent.
The Bloomberg Dollar Spot Index was little changed. The euro climbed 0.4 percent to $1.1456. The British pound added 0.2 percent to $1.2862. The Japanese yen rose 0.3 percent to 112.45 per dollar.
The yield on 10-year Treasuries declined 1 basis point to 3.0573 percent. Britain’s 10-year yield decreased three basis point to 1.378 percent. Germany’s 10-year yield jumped one basis point to 0.373 percent.
The Bloomberg Commodity Index gained 1.1 percent. West Texas intermediate crude decreased 0.2 percent to $56.57 a barrel. Natural gas rose 11.7 percent to $4.772 per mmbtu. Gold was little changed at $1,223.69.