US Stocks Close Lower on Apple Warning 02/18 15:45
Major U.S. stock indexes are closing mostly lower Tuesday, as the market
gives up some of its gains from the past two weeks.
(AP) -- Major U.S. stock indexes are closing mostly lower Tuesday, as the
market gives up some of its gains from the past two weeks. The selling, which
lost some of its momentum in the final hour of trading, came as investors
weighed the impact of the virus outbreak in China on Apple and other major
companies. Tech companies and banks led the selling. Utilities and
communication services stocks held up well. The S&P 500 index fell 0.3% to
3,370. The Dow Jones Industrial Average slid 165 points, or 0.6%, to 29,232.
The Nasdaq inched up less than 0.1%. Bond yields fell.
Major U.S. stock indexes were mostly lower in late-afternoon trading
Tuesday, putting the market on track to give up some of its solid gains from
the past two weeks.
The selling, which lost some of its momentum in the final hour of trading,
came as investors weighed the impact of the virus outbreak in China on Apple
and other major companies.
The tech giant said revenue will fall short of previous forecasts in the
fiscal second quarter because production has been curtailed and consumer demand
for iPhones has slowed in China. Apple's stores there are are either closed or
operating on reduced hours.
Technology stocks accounted for a big slice of the selling. Apple shed 1.8%.
Some chipmakers, which also rely heavily on China for sales and supplies, also
fell. Intel shed 1.7%.
Banks and energy stocks declined. HSBC said it will cut 35,000 jobs and shed
$100 billion in assets. Its shares dropped 5.5%. Wells Fargo slid 2.5% and
Schlumberger dropped 1.9%.
Bond prices rose. The yield on the 10-year Treasury fell to 1.55% from 1.58%
Communication services stocks and utilities held up better than most of the
market. Dish Network climbed 3.5% and Xcel Energy rose 1.4%.
KEEPING SCORE: The S&P 500 index fell 0.3% as of 3:31 p.m. Eastern time. The
Dow Jones Industrial Average slid 155 points, or 0.5%, to 29,242. It had been
down 281 points. The Nasdaq recovered from an early slide, inching up less than
0.1%. The Russell 2000 index of smaller company stocks fell 0.2%. European and
Asian markets fell.
CHINA OUTBREAK: The viral outbreak that began in China has now infected more
than 73,000 people and continues to hurt businesses worldwide. The majority of
the cases and deaths remain centered in China.
Businesses continue to feel the economic impact from the virus. The Beijing
auto show, the industry's biggest global event of the year, is being postponed
indefinitely from its April date. And shares in Medtronic fell 3.7% after the
medical device maker warned investors that the virus outbreak will impact its
Apple is among the most notable companies to warn investors that the virus
will hurt its financial performance. While the projected revenue miss took Wall
Street by surprise, some analysts played down the long-term impact of the
iPhone production delay on Apple.
In a research note Tuesday, Canaccord Genuity analyst Michael Walkley said
that Apple continues to perform strongly across all business lines, including
iPhone 11 demand outside of China.
"Despite the lowered near-term iPhone sales estimates, we believe Apple
remains on track to reach this target," Walkley wrote.
Technology and health care companies have been the most vocal about
mentioning the new coronavirus in their earnings conference calls, according to
LOTS OF BENJAMINS: Financial services company Franklin Resources jumped 7.7%
after saying it is buying competitor Legg Mason for $4.5 billion. The deal will
create a financial company with a combined $1.5 trillion in assets under
management. Legg Mason shares vaulted 24.3%.
EARNINGS SNAPSHOT: Traders continued to assess company earnings reports.
Advance Auto Parts climbed 7.3% after the auto parts supplier's results topped
Wall Street's forecasts. Conagra Brands dropped 5.5% after the food producer
cut its fiscal 2020 profit and revenue forecasts, citing surprisingly weak
WEEK AHEAD: Investors face a shortened week because of Monday's President's
Day holiday, but there are still several key earnings and economic reports on
More than three-quarters of the S&P 500 has already reported financial
results, and 51 companies are scheduled to release results this week. Devon
Energy and Concho Resources will report their results later Tuesday.
Progressive will report results on Wednesday and ViacomCBS will report on
The government will release its producer price index for January on
Wednesday, along with housing starts data.