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Stocks Close Sharply Lower Amid Steep Drop By Apple - U.S. Commentary


Stocks moved sharply lower over the course of the trading day on Monday, adding to the notable losses posted in the previous session. With the sell-off on the day, the Dow continued to give back ground after reaching its best closing level in a month last Thursday.

The major averaged ended the day just off their lows of the session. The Dow plunged 602.12 points or 2.3 percent to 25,387.18, the Nasdaq plummeted 206.03 points or 2.8 percent to 7,200.87 and the S&P 500 slumped 54.79 points or 2 percent to 2,726.22.

A sharp decline by shares of Apple (AAPL) weighed on Wall Street, with the tech giant tumbling by 5 percent to its lowest closing level in over three months.

The steep drop by Apple came after iPhone parts supplier Lumentum (LITE) cut its fiscal second quarter guidance, adding to recent concerns about iPhone demand.

Industrial conglomerate General Electric (GE) also moved significantly lower after Chairman and CEO Larry Culp told CNBC he feels the "urgency" to reduce the company's leverage and will do so through asset sales.

Concerns about the outlook for global economic growth and a continued increase in interest rates also contributed to the sell-off on Wall Street.

Meanwhile, in a post on Twitter, President Donald Trump claimed, "The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!"

Light trading activity may have exaggerated the downward move, however, as government offices, the bond markets, and most banks were closed in observance of Veterans Day.

A lack of major U.S. economic data also kept some traders on the sidelines ahead of the release of reports on consumer price inflation, retail sales, and industrial production in the coming days.

A speech by Federal Reserve Chairman Jerome Powell on Wednesday is also likely to attract attention, as traders look for additional clues about the outlook for interest rates.

Last week, the Fed left interest rates unchanged as widely expected but indicated it remains on track to gradually raise rates despite signs of a slowdown in the pace of growth in business investment.

Sector News

Semiconductor stocks showed a substantial move to the downside on the day, resulting in a 4.4 percent nosedive by the Philadelphia Semiconductor Index.

Within the semiconductor sector, Skyworks Solutions (SWKS) posted a steep loss after Citi downgraded its rating on the Apple chip supplier's stock to Neutral from Buy.

Significant weakness was also visible among oil service stocks, as reflected by the 3.9 percent slump by the Philadelphia Oil Service Index. The index ended the session at a more than nine-year closing low.

The sell-off by oil service stocks came as the price of crude oil turned lower after seeing initial strength. Crude for December delivery fell $0.26 to $59.93 a barrel, closing below $60 a barrel for the first time since February.

Computer hardware, biotechnology, networking and software stocks also saw considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Most of the other major sectors also moved to the downside on the day, with notable weakness visible among tobacco, retail, brokerage and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both inched up by 0.1 percent, while China's Shanghai Composite Index shot up by 1.2 percent.

Meanwhile, the major European markets showed notable moves to the downside on the day. While the German DAX Index plunged by 1.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index dropped by 0.9 percent and 0.7 percent, respectively.

Treasuries moved notably higher during the trading session last Friday, but the bond markets remained closed on Monday in observance of Veterans Day.

Looking Ahead

Amid another quiet day on the U.S economic front, trading on Tuesday may be impacted by reaction to the latest earnings news.

Home improvement retail giant Home Depot (HD) is among the companies due to report their quarterly results before the start of trading on Tuesday.

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