Tech giants slump, stocks fall sharply

Dow plunges more than 600 points

FILE- In this Nov. 7, 2018, file photo trader Timothy Nick, center, works with specialist Michael O'Mara on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Monday, Nov. 12. (AP Photo/Richard Drew, File)
FILE- In this Nov. 7, 2018, file photo trader Timothy Nick, center, works with specialist Michael O'Mara on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Monday, Nov. 12. (AP Photo/Richard Drew, File)

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. Oil prices fell, erasing early gains and extending a losing streak to 11 days.

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.

President Donald Trump turned to a new explanation for stock market declines Monday, blaming scrutiny his administration could face from Democrats who recently won the majority in the House of Representatives.

'The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!' he tweeted Monday.

The justification was the latest offered by a president who frequently touted stock market gains early in his administration as evidence of the nation's economic health and his success in governing.

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

"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."

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 chip makers 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.

Apple's stumble seemed to weigh on other previously high-flying technology companies. Amazon shares dropped 4.4 percent, and Facebook fell 2.4 percent. The social network was briefly offline for many users Monday afternoon, giving visitors an error message saying "sorry, something went wrong."

Alphabet, the parent company of Google, declined 2.6 percent, and Netflix stock fell more than 3 percent.

Large tech companies have been crucial to the market's performance this year. From the start of the year through the market's Sept. 20 peak, roughly half the gain of the S&P 500 was attributable to five huge tech companies: Apple, Amazon, Microsoft, Netflix and Alphabet. Through much of last month's slump, these companies held up reasonably well.

Banks and other financial companies also took heavy losses Monday. 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.

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 practices 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 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 and derivatives at Charles Schwab. "We're clearly getting into the late innings of the ball game."

British American Tobacco, which makes Newport cigarettes, plunged 8.8 percent to $38.08 on reports that regulators were considering a ban on menthol cigarettes.

PG&E tumbled 17.4 percent to $32.98 after the electric utility told regulators that a high-voltage line experienced a problem near the origin of one of the major California wildfires before the blaze started.

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 to the consumer this holiday season."

The dollar strengthened to 113.86 yen from 113.80 yen on Friday. The euro fell to $1.1240 from $1.1336. The British pound weakened to $1.2853 from $1.2975 amid concerns that Britain's government is struggling to find unity on a European Union-exit deal.

Gold fell 0.4 percent to $1,203.50 an ounce. Silver lost 0.9 percent to $14.01 an ounce. Copper slid 0.3 percent to $2.68 a pound.

In other energy trading, heating oil fell 0.8 percent to $2.16 a gallon and wholesale gasoline gained 0.9 percent to $1.64 a gallon. Natural gas rose 1.9 percent to $3.79 per 1,000 cubic feet.

Major stock indexes in Europe also ended lower Monday. Germany's DAX lost 1.8 percent and France's CAC 40 fell 0.9 percent. Britain's FTSE 100 shed 0.7 percent.

In Asia, markets finished mixed. Japan's Nikkei 225 added 0.1 percent, while Hong Kong's Hang Seng rose 0.1 percent. Australia's S&P-ASX 200 gained 0.3 percent. The Kospi in South Korea dipped 0.3 percent.

Information for this article was contributed by Alex Veiga of The Associated Press, by Stephen Grocer and Matt Phillips of The New York Times, and by Justin Sink of Bloomberg News.

A Section on 11/13/2018

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