Technology stocks dragged down Wall Street on Tuesday after a surprise sales warning from bellwether Apple fanned worries about the impact of the coronavirus outbreak on global supply chains.
The world’s most valuable technology firm said it was unlikely to meet its March-quarter sales guidance because of slower iPhone production and weaker demand in China, sending its shares down 2.5 per cent.
The news also sent shares of Apple suppliers, including Qualcomm, Broadcom, Qorvo and Skyworks Solutions, lower by 1.9 per cent to 3 per cent.
Chipmakers, which are heavily dependent on China for revenues, slipped with the Philadelphia SE Semiconductor index shedding 1.6 per cent, while the broader S&P technology sector lost 0.7 per cent.
Apple’s warning highlights issues that will eventually hurt a lot of companies with exposure to China, said Art Hogan, chief market strategist at National Securities in New York.
“It has shifted people’s focus back to the ultimate economic damage in the wake of this coronavirus,” Hogan said.
While the exact hit to growth from the epidemic in China – the global manufacturing hub – still remains to be seen, hopes that the damage would only be temporary have helped Wall Street’s main indexes clinch record highs as early as last week.
At 9:52 a.m. ET, the Dow Jones Industrial Average was down 106.66 points, or 0.36 per cent, at 29,291.42, while the S&P 500 was 7.49 points, or 0.22 per cent, lower at 3,372.67.
The Nasdaq Composite was down 19.12 points, or 0.20 per cent, at 9,712.05.
In Toronto, the S&P/TSX composite index was down 4.98 points to 17,510.00 at 9:50 a.m. ET.
Investors also parsed through mixed corporate earnings reports.
Walmart forecast slowing online growth for the year after reporting weak results for the holiday quarter, suggesting it was leaking sales to Amazon.com. However, shares of the world’s biggest retailer rose 1 per cent.
Conagra Brands shed 7.4 per cent after the packaged food company lowered its full-year profit and sales outlook.
Kroger climbed 6.6 per cent after Warren Buffett’s Berkshire Hathaway unveiled a $549.1 million stake in the supermarket chain.
Asset manager Franklin Resources said it would buy mutual fund company Legg Mason in an all-cash deal valued at $4.5 billion, to create an investing giant with about $1.5 trillion in assets under management.
Shares of Franklin jumped 9.4 per cent and Legg Mason surged 23.9 per cent.
Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and a 1.09-to-1 ratio on the Nasdaq.
The S&P index recorded 53 new 52-week highs and three new lows, while the Nasdaq recorded 70 new highs and 28 new lows.
— With a file from the Canadian Press