Tech stock sell-off pushes markets lower
Banks and tech companies hit hard, while OPEC cut buoys oil price
A steep drop in technology companies sent U.S. stocks sharply lower Monday, knocking off more than 600 points from the Dow Jones Industrial Average.
The Dow Jones Industrial Average closed off by 602 points or just over two per cent to 25,387 as technology companies like Microsoft, Intel, Cisco and Apple were all sharply lower.
Apple shares fell to their lowest level in three months after reports suggesting iPhone demand is waning, especially in growing markets like Asia. An Apple component maker called Lumentum Holdings slashed its profit forecasts for the year on slower demand, which analysts interpreted as meaning Apple will be buying less of their products because their own devices aren't selling.
"Tech is definitely weighing (on the market)," said Lindsey Bell, investment strategist at CFRA Research. "The question really is growth. 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."
Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh said since the technology companies were powered higher for years by showing any amount of growth, "any little bit of growth that goes away from the company, makes the company less desirable."
John Zechner, chairman of Toronto-based money manager J. Zechner Associates described the market sentiment as being "twitchy."
"The concern was that Apple isn't going to sell as many iPhones," he said. "I don't know why it is that the whole market has to follow that down but it's twitchy."
U.S. president Donald Trump blamed the weak stock market on uncertainty caused by various recall attempts by Democrats over last week's midterm election results.
The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!—@realDonaldTrump
"Every time Donald Trump tweets something the market gets into a foul mood," Zechner said.
Financial shares were also lower. Investment bank Goldman Sachs closed down by more than seven per cent at $206.05 a share.
"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.
The Toronto Stock Exchange held up slightly better, off 120 points or about half a per cent to 15,123 at the close. Oil was briefly higher after the Organization of the Petroleum Exporting Countries or OPEC announced plans to cut production.
After a weekend meeting, the oil cartel announced that Saudi Arabia plans to reduce exports by around 500,000 barrels a day from November to December. And Iranian oil sanctions recently kicked in that should theoretically also reduce the global supply of oil, boosting prices of what is available.
But by the end of the day, oil too had turned lower, with West Texas Intermediate closing down more than $1 to just over $59 a barrel. It was the 11th straight losing day for the North American crude benchmark, its longest streak on record.
With files from The Associated Press, Reuters and the CBC's Meegan Read