Tech giants slide, pulling US stock market sharply lower

Specialist Peter Mazza, left, works on the floor of the New York Stock Exchange, Wednesday, Nov. 7, 2018. Stocks are climbing in early trading on Wall Street as results of the U.S. midterm elections came in as investors had expected. (AP Photo/Richard Drew)
Specialist Peter Mazza, left, works on the floor of the New York Stock Exchange, Wednesday, Nov. 7, 2018. Stocks are climbing in early trading on Wall Street as results of the U.S. midterm elections came in as investors had expected. (AP Photo/Richard Drew)

A broad sell-off in technology companies pulled U.S. stocks sharply lower Monday, knocking more than 600 points off the Dow Jones Industrial Average.

The wave of selling snared big names, including Apple, Amazon and Goldman Sachs. Banks, consumer-focused companies, and media and communications stocks all took heavy losses. Crude oil prices fell, erasing early gains and extending a losing streak to 11 days.

The tech stock tumble came followed an analyst report that suggested Apple significantly cut back orders from one of its suppliers. That, in turn, weighed on chipmakers.

"With the news out of the Apple supplier this morning, you have the market overall questioning the growth trajectory as we look out to 2019," said Lindsey Bell, investment strategist at CFRA. "We continue to like tech going into next year, but we think it could be a little bit of a rocky period for the group as we continue through the last two months of the year."

The market's slide came after a two-week winning streak.

The S&P 500 index dropped 54.79 points, or 2 percent, to 2,726.22. The Dow fell 602.12 points, or 2.3 percent, to 25,387.18. It was down briefly by 648 points.

The Nasdaq composite slid 206.03 points, or 2.8 percent, to 7,200.87. The Russell 2000 index of smaller companies gave up 30.70 points, or 2 percent, to 1,518.79.

Bond trading was closed for Veterans Day. Stocks in Europe also suffered losses.

Apple tumbled 5 percent to $194.17 after Wells Fargo analysts said the iPhone maker is the unnamed customer that optical communications company Lumentum Holdings said was significantly reducing orders. Shares in Lumentum plunged 33 percent to $37.50.

Several chipmakers also fell. Advanced Micro Devices gave up 9.5 percent to $19.03, while Nvidia lost 7.8 percent to $189.54. Micron Technology gave up 4.3 percent to $37.44.

Amazon slid 4.4 percent to $1,636.85.

Banks and other financial companies also took heavy losses Tuesday. Goldman Sachs slid 7.5 percent to $206.05.

"Expectations are really that the deregulation process that has benefited banks up to this point is going to be slowed down with the Democrats in charge," Bell said.

In Chattanooga, the Dixie Group suffered the biggest drop in share prices Monday, falling 7.3 percent, while shares of Astec Industries fell by more than 4.1 percent and Mohawk Industries declined by nearly 3.3 percent.

Stocks appeared to have regained their footing after a skid in October snapped a six-month string of gains for the S&P 500. Stocks rallied last week after the U.S. midterm elections turned out largely as investors expected, with a divided Congress promising legislative gridlock in Washington the next couple of years.

While the market has typically thrived in periods of divided government, investors continue to grapple with uncertainty over the U.S.-China trade dispute and the potential impact of increased oversight of Corporate America by Democrats, who will be taking over leadership in the House of Representatives in January.

In addition, some companies have recently reported third-quarter earnings and outlooks that have stoked investors' worries about the future growth of corporate profits.

While companies got a boost this year from the lower tax rates put in place by President Donald Trump and the GOP last December, several companies have recently warned about the impact of higher costs related to tariffs and rising interest rates.

"The bull market is not over, the economic expansion is not over, but things are starting to wind down," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. "We're clearly getting into the late innings of the ball game."

About 90 percent of S&P 500 companies have reported third-quarter results so far, with some 51 percent of those posting earnings and revenue that topped Wall Street's forecasts, according to S&P Global Market Intelligence. Several big retailers are due to deliver results this week, including Walmart, Home Depot, Williams-Sonoma, Nordstrom and J.C. Penney.

"That could actually probably boost the market," Bell said. "Retailers are going to have a better third quarter than most people expect. A lot of them ordered goods ahead of the tariffs going into place, so they're not going to have to pass on higher prices on to the consumer this holiday season."

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