(Reuters) – U.S. stocks dropped on Tuesday after a surprise sales warning from tech bellwether Apple highlighted the impact of the coronavirus outbreak on global supply chains.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 6, 2020. REUTERS/Lucas Jackson
The world’s most valuable technology firm (AAPL.O) said it would fall short of its recently announced quarterly sales target because of slower iPhone production and weaker demand in China, sending its shares down 2.6%.
China-exposed chipmakers slipped, with the Philadelphia SE Semiconductor index .SOX shedding 1.6%, while the broader S&P technology sector .SPLRCT lost 0.6%.
“The market is taking it in (its) stride, meaning that they know that this virus is going to have an impact on the supply chain but the severity of the impact is still unclear,” said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.
“But investors are not overly concerned and we’re higher this year just because we’ve got an accommodative Fed, higher earnings and – when you exclude the impact of the virus- an incredibly resilient consumer.”
While the exact hit to economic 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.
The Nasdaq Composite .IXIC was down 30.03 points, or 0.31%, at 9,701.14.
Energy stocks .SPNY fell 1.2%, while the interest-rate sensitive banks sub-sector .SPXBK lost 1.8% as higher demand for safer assets pressured U.S. Treasury yields.
Of the nearly 400 companies in the S&P 500 which have reported fourth-quarter earnings, 70.8% have beat analysts’ profit estimates, according to IBES data from Refinitiv.
Walmart Inc (WMT.N) shares rose 0.9% even after the world’s biggest retailer forecast slowing online growth for the year and reported weak results for the holiday quarter.
Conagra Brands Inc (CAG.N) shed nearly 5.4% after the packaged food company lowered its full-year profit and sales outlook.
Tesla Inc (TSLA.O) jumped 5.7% as Bernstein and Morgan Stanley raised their prices targets for the electric carmaker’s shares.
Declining issues outnumbered advancers for a 1.68-to-1 ratio on the NYSE and for a 1.54-to-1 ratio on the Nasdaq.
The S&P index recorded 65 new 52-week highs and five new lows, while the Nasdaq recorded 108 new highs and 54 new lows.
Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu