Stocks retreated amid concern over how a Chinese ban on Apple Inc.’s iPhone could impact other segments of the American technology industry. Treasuries were mixed and the dollar was little changed.
(Bloomberg) — Stocks retreated amid concern over how a Chinese ban on Apple Inc.’s iPhone could impact other segments of the American technology industry. Treasuries were mixed and the dollar was little changed.
The Nasdaq 100 dropped about 1%. Apple slid 7% in two days, and was on track to wiping out over $200 billion in the span. The shares broke below the key 100-day moving average, which is seen as a bearish signal by some technical analysts. The company’s suppliers such as Qualcomm Inc. and Micron Technology Inc. retreated, while fellow megacaps Tesla Inc. and Nvidia Corp. slid at least 2.5%.
“The Nasdaq is sinking as one bad Apple spoils a bunch of megacap tech stocks,” said Edward Moya, senior market analyst for the Americas at Oanda. “Apple’s growth story is heavily reliant on China, and if the Beijing crackdown intensifies, that could pose a big problem to the bunch of other megacap tech companies that rely on China.”
China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple in its biggest foreign market and global production base. In addition, Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organizations, people familiar with the matter said.
“We are confident that Apple, who produces a large percentage of their phones in China, will come to some compromise. But that is weighing on both the S&P and Nasdaq,” said Andrew Brenner at NatAlliance Securities.
Traders also kept a close eye on the latest economic data, with solid jobless claims data reinforcing the case for the Federal Reserve to keep rates elevated.
After climbing in the immediate aftermath of the report, two-year US yields fell below 5%. The yield on 30-year bonds edged higher. The dollar fluctuated after hitting an almost six-month high earlier this week.
“A solid round of employment data that reinforces the perception that the jobs market will remain resilient for the time being,” said Ian Lyngen at BMO Capital Markets. “From here, the market will remain wary of corporate hedging related flows as they have been the biggest driver of price action in US rates thus far in September.”
The euro retreated as the region barely grew in the second quarter. The onshore yuan slipped to a 16-year low, as pessimism grew toward China’s economy.
Trillions of dollars of derivatives beyond the reach of central clearinghouses face more regular checks as the industry moves to address criticism it was caught flat-footed in episodes of volatility.
The International Swaps and Derivatives Association, the main industry body for the market, wants traders to adjust margins more often, in order to buffer losses if bets go awry. The Standard Initial Margin Model, or SIMM, will undergo semiannual instead of annual recalibrations from 2025, according to ISDA.
- Boeing Co. warned that deliveries of its cash-cow 737 jetliner will come in at the low end of its targeted range this year as a recently discovered supplier glitch crimps output. The shares were little changed.
- Ford Motor Co. said it raised the pay of 8,000 US hourly workers represented by the United Auto Workers union just a week before its union contract expires. The shares retreated.
- Dell Technologies Inc. dropped after Barclays Plc downgraded the personal-computer company to underweight.
- C3.ai Inc. sank after giving a lackluster sales forecast and said profitability will take longer than expected, fueling anxiety the software company is struggling to capitalize on enthusiasm for artificial intelligence.
- McDonald’s Corp. rose after Wells Fargo upgraded the fast-food chain to overweight, expecting the company to “stand tall” as quick-service restaurant trends slow.
- Online grocery delivery startup Instacart Inc. is preparing to set a price range for its initial public offering and start its investor roadshow as early as Monday, according to people familiar with the matter.
- Talks will continue between Chevron Corp. and labor unions in Australia, as workers delayed strike action a second time.
- Union Pacific Corp., CSX Corp., Norfolk Southern Corp. and other US railroads may be compelled to switch rail cars with each other under a rule proposed by the rail regulator to address poor service.
Key events this week:
- Japan GDP, Friday
- Germany CPI, Friday
- US wholesale inventories, consumer credit, Friday
Some of the main moves in markets:
- The S&P 500 fell 0.4% as of 11:04 a.m. New York time
- The Nasdaq 100 fell 0.9%
- The Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 fell 0.1%
- The MSCI World index fell 0.4%
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.0703
- The British pound fell 0.2% to $1.2477
- The Japanese yen rose 0.3% to 147.16 per dollar
- Bitcoin rose 0.3% to $25,745
- Ether rose 0.2% to $1,630.25
- The yield on 10-year Treasuries was little changed at 4.28%
- Germany’s 10-year yield declined three basis points to 2.62%
- Britain’s 10-year yield declined five basis points to 4.48%
- West Texas Intermediate crude was little changed
- Gold futures fell 0.1% to $1,942.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
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