Traders Shun Risk Amid Apple’s $190 Billion Rout: Markets Wrap

Stocks retreated amid concern over how a Chinese ban on Apple Inc.’s iPhone could impact big tech, the industry that has driven this year’s market rally. Treasuries rose alongside the dollar.

(Bloomberg) — Stocks retreated amid concern over how a Chinese ban on Apple Inc.’s iPhone could impact big tech, the industry that has driven this year’s market rally. Treasuries rose alongside the dollar.

The Nasdaq 100 underperformed as Apple slid about 6.5% in two days, wiping out $190 billion in value. The company’s suppliers such as Qualcomm Inc. and several megacaps like Nvidia Corp. got hit. Apple breached the key 100-day moving average, which is seen as a bearish signal by some chartists. Amid the risk-off push, the Russell 2000 of small caps also closed below the same technical threshold. An advance in defensive groups sent the S&P 500 away from session lows, while Dow Jones Industrial Average of blue chips gained.

“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,” said Edward Moya, senior market analyst for the Americas at Oanda. 

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.

Apple is unlikely to face a material financial impact from China’s restrictions, according to Evercore ISI’s Amit Daryanani. Government officials were probably already avoiding the company’s products, and it would be hard for the nation to take more substantive action against Apple without affecting jobs in the country — which is where most iPhones are assembled, he wrote.

‘More Challenging’

Tech shares have soared in 2023 amid the artificial-intelligence frenzy and speculation that the Federal Reserve is getting closer to wrapping up its interest-rate hikes. The nearly 40% run-up in the Nasdaq 100 this year suggests that valuations look stretched, according to some metrics, with the industry ripe for a correction.

“We expect market choppiness to persist near term,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “September, like August, has tended to be a more challenging month, and there remains a dearth of obvious near-term upside catalysts as stocks continue to digest the big year-to-date gains.”

Meantime, active managers’ holdings last month skewed defensive, according to data compiled by Bank of America Corp. 

Hedge funds and active long-only funds have upped their exposure to utilities stocks relative to historical averages. Active equity exposure to “high beta stocks remains well below average,” the BofA strategists said.

Economy, Fedspeak

Traders also kept a close eye on the latest economic data, with solid jobless claims figures reinforcing the case for the Fed to keep rates elevated. Applications for US unemployment benefits fell to the lowest level since February.

After climbing in the immediate aftermath of the report, two-year US yields fell below 5%. The Bloomberg Dollar Spot Index saw a small advance, and was on track for its longest streak of weekly gains since 2005.

Fed Bank of New York President John Williams said US monetary policy is “in a good place,” but officials will need to parse through data to decide on how to proceed on interest rates. He spoke during a moderated discussion with Bloomberg’s Michael McKee in New York.

Separately on Thursday, Chicago Fed President Austan Goolsbee told the Marketplace radio program: “We are very rapidly approaching the time when our argument is not going to be about how high should the rates go.”

“We’ve seen this movie before,” said Mike Loewengart at Morgan Stanley Global Investment Office. “Yes, the economy has slowed and inflation has cooled, but employment continues to be a thorn in the side of the Fed, which has made softening the jobs market the cornerstone of its inflation battle. The Fed may be poised to leave interest rates unchanged later this month, but they’re nowhere close to backing away from a higher-for-longer stance.”

The euro retreated as the region barely grew in the second quarter. The onshore yuan slipped to an almost 16-year low as pessimism grew toward China’s economy. Oil dropped after a nine-session rally propelled futures into overbought territory. 

Corporate Highlights

  • Boeing Co. fell after warning 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.
  • General Motors Co. made a counteroffer to the United Auto Workers union, proposing a total 16% pay raise for the top wage earners in its plants and a 56% hike for newer employees who make less. UAW President Shawn Fain reacted quickly saying the proposal is “insulting.”
    • 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.
  • Dell Technologies Inc. dropped after Barclays Plc downgraded the personal-computer company to underweight.
  • 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.
  • BlackBerry Ltd. slid after the company cut its second-quarter revenue guidance to below the average of analyst estimates.
  • 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.

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 0.3% as of 4 p.m. New York time
  • The Nasdaq 100 fell 0.7%
  • The Dow Jones Industrial Average rose 0.2%
  • The MSCI World index fell 0.4%


  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.3% to $1.0697
  • The British pound fell 0.3% to $1.2473
  • The Japanese yen rose 0.3% to 147.20 per dollar


  • Bitcoin rose 0.8% to $25,878
  • Ether rose 0.6% to $1,637.17


  • The yield on 10-year Treasuries declined three basis points to 4.25%
  • Germany’s 10-year yield declined four basis points to 2.61%
  • Britain’s 10-year yield declined eight basis points to 4.45%


  • West Texas Intermediate crude fell 0.6% to $87 a barrel
  • Gold futures were little changed

This story was produced with the assistance of Bloomberg Automation.

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