U.S. Stocks Fall After Apple's Sales Warning
February 18 2020 - 5:07PM
Dow Jones News
By Anna Hirtenstein and Karen Langley
The Dow Jones Industrial Average dropped Tuesday after Apple
warned its revenue may be lower than forecast due to the
coronavirus in China, one of the most significant indications yet
of the outbreak's impact on multinational businesses.
The blue-chip index fell 165.89 points, or 0.6%, to 29232.19.
The S&P 500 lost 9.87 points, or 0.3%, to 3370.29.
After spending most of the day in negative territory, the
tech-heavy Nasdaq Composite turned positive in the afternoon,
gaining 1.57 points, less than 0.1%, to 9732.74, a new record
close.
Shares of Apple declined $5.95, or 1.8%, to $319 after the
technology giant said revenue this quarter won't reach its targeted
range of $63 billion to $67 billion as the virus has limited iPhone
production and curtailed demand in China.
"This is a reality check that it's really happening," said Kit
Juckes, a macro strategist at Société Générale. "While it's not a
big surprise that the global economy has been affected all the way
to California tech, some people take this as a confirmation."
Weeks after concerns over the coronavirus outbreak began to jolt
markets, the extent to which the global economy will suffer remains
unclear. The outbreak forced companies to shut down their Chinese
operations temporarily, while travel bans and restrictions on
movement in public spaces led to a slowdown in consumer spending
and industrial production in the world's second-largest economy.
The number of new cases of people diagnosed with the virus rose
sharply last week, indicating that it isn't yet contained.
Although the S&P 500 and the Dow lost ground Tuesday, major
indexes remain close to all-time highs. The S&P 500 has hit a
dozen record closes in 2020, after climbing 29% in 2019.
Investors eager for fresh clues about the state of the economy
parsed data Tuesday showing that a measure of U.S. home-builder
confidence edged down in February but remains near a two-decade
high. On Friday, a survey from the University of Michigan showed
Americans' economic outlook rose strongly in early February.
"Recent data has been leaning toward the stronger side,
particularly around the labor market," said Charlie Ripley, senior
investment strategist at Allianz Investment Management. "Consumer
sentiment appears to be elevated still, and equities have kind of
hung in there over this time frame. We think overall the U.S. is
still in pretty good shape."
Among individual stocks Tuesday, Franklin Resources gained
$1.69, or 6.9%, to $26.05 after it agreed to buy Legg Mason and
form a $1.5 trillion-asset manager. Kroger rose $1.48, or 5.2%, or
$29.71 after Warren Buffett's Berkshire Hathaway said it had bought
a stake in the company.
Packaged food company Conagra Brands slid $2.01, or 6.1%, to
$30.68 after it cut its outlook for the year.
Elsewhere, the pan-continental Stoxx Europe 600 declined 0.4%,
while most major markets in Asia closed down, with the Hang Seng
Index falling 1.5%.
Amid fresh concerns about the global economy, investors directed
capital into haven assets. The yield on U.S. 10-year Treasurys
slipped to 1.555%, from 1.587% on Friday. Gold rallied 1.1% to its
highest settle value since April 1, 2013.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Karen
Langley at karen.langley@wsj.com
(END) Dow Jones Newswires
February 18, 2020 16:52 ET (21:52 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.