By Donato Paolo Mancini and Akane Otani 

The Dow Jones Industrial Average tumbled more than 400 points Monday as anxiety over the health of technology behemoths sparked a broad retreat from the stock market.

The blue-chip index of 30 stocks lost 406 points, or 1.6%, to 25583 after posting its biggest one-week gain since March. The S&P 500 lost 1.5% and the Nasdaq Composite dropped 2.7%.

Monday's selling began in the technology sector, then morphed into a broad rout that dragged lower everything from oil conglomerates to manufacturers to entertainment firms. It was the latest setback for the stock market, which has struggled to break out to new highs since the S&P 500 capped off its worst month in more than seven years.

Investors were left scrambling for explanations. Some pinned the retreat to a broad retreat from risky assets that they say look increasingly vulnerable to a reversal following a yearslong rally. Others blamed nervousness around the future of fast-growing chip makers, social media firms and consumer device giants that had driven much of the bull market's gains earlier in the year.

Apple fell 4.4% after one of its suppliers, Lumentum, cut its earnings and revenue outlook -- triggering fresh worries about demand for the company's iPhone line. The fall of companies like Apple, among others, has often preceded broader pullbacks this year as investors have questioned what sectors can ride higher as the global economy shows more signs of slowing.

"People tend to ask what's Amazon doing today? What's Apple doing today?" said Robert Pavlik, senior portfolio manager and chief investment strategist at SlateStone Wealth. And when those technology giants, among others, falter, investors tend to become increasingly nervous about how far the broader market can rise, Mr. Pavlik added.

As stocks slumped, investors flocked to shares of dividend-paying sectors that tend to perform well during periods of heightened volatility. The utility and real-estate sectors rose 0.6% and 0.5% apiece, the only two groups in the S&P 500 to post gains so far in the day.

Those drops overshadowed a rebound in oil prices, which briefly brought the energy sector higher after Saudi Arabia said it would slash exports and the Organization of the Petroleum Exporting Countries considered a collective production cut.

U.S. crude oil jumped 1.2% Monday, reversing course after erasing its 2018 gains and entering a bear market last week. Now, signs of a coming oil glut and falling crude prices have pushed suppliers nearer to a pact to reduce output.

"The size of any production cuts will likely depend on how much oil demand growth will slow down into 2019, how much Iranian supply falls due to U.S. sanctions and how strongly U.S. supply increases over the coming months," said Giovanni Staunovo, a commodities analyst at UBS Wealth Management, noting that OPEC only makes decisions at certain meetings, the next of which is scheduled for the beginning of December.

Elsewhere, the Stoxx Europe 600 fell 1%, hurt by drops in its autos, technology and travel and leisure sectors.

The euro and pound both fell against the U.S. dollar, dragged by heightened uncertainty in Brexit negotiations. Party infighting among U.K. Prime Minister Theresa May's Conservatives and unsolved questions on Northern Ireland were among the factors weighing down sterling on Monday, analysts said.

In Asia, Japan's Nikkei Stock Average closed 0.1% higher, while Hong Kong's Hang Seng gained 0.1%.

Fears about slowing growth in China and trade tensions weighing on consumption were assuaged by Alibaba Group Holding's Singles Day on Sunday, when Chinese consumers bought $30.8 billion worth of goods in 24 hours, surpassing last year's $25.3 billion.

"Sales were up compared with last year, indicating that Chinese consumers are strong and fears about a Chinese slowdown might be overdone," said Carsten Brzeski, chief economist at ING in Germany. "[It] should be positive for Europe, at least at the [market] opening."

Write to Akane Otani at akane.otani@wsj.com

 

(END) Dow Jones Newswires

November 12, 2018 12:20 ET (17:20 GMT)

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