181121 New York Stock Exchange 3
Traders at the New York Stock Exchange. Stocks fell again yesterday morning with the Dow Jones Industrial average plunging over 400 points after the opening bell. Image Credit: AFP

New York: US stocks opened sharply lower on Tuesday as poor forecasts from retailers for the holiday quarter fed into a market driven lower this week by concerns about demand for iPhones.

The Dow Jones Industrial Average fell 398.76 points, or 1.59 per cent, at the open to 24,618.68.

The S&P 500 opened lower by 36.13 points, or 1.34 per cent, at 2,654.60. The Nasdaq Composite dropped 161.05 points, or 2.29 per cent, to 6,867.43 at the opening bell.

Most of Europe had a red session on Tuesday and that has been compounded by the news on Apple and tech stocks overnight, The overall climate is risk-off.

- Philip Shaw | Investec economist

The dollar sagged on concern about the US economy after home-builder sentiment weakened and oil prices fell half a per cent despite Organisation of Petroleum Expoerting Countries (Opec) production cuts.

News around Apple Inc triggered the latest bout of stock market selling, after the Wall Street Journal reported Apple was cutting production for its new iPhones.

The European tech sector sank 2.2 per cent, hitting its lowest level since February 2017, following Asian tech stocks lower. Shares of companies supplying chips to Apple suffered.


The sell-off was compounded by an auto sector drop led by Nissan and Renault after Ghosn, chairman of both carmakers, was arrested in Japan for alleged financial misconduct.

The broad European STOXX 600 index was down 0.5 per cent to a four-week low, and futures trading suggested another tough session was likely in the United States, with Nasdaq Futures down over 1 per cent.

“Most of Europe had a red session yesterday and that has been compounded by the news on Apple and tech stocks overnight, The overall climate is risk-off,” said Investec economist Philip Shaw.

“Beyond stocks, the Italian bonds spread [over German bonds] is at its widest in about a month now, and Brexit continues to rumble on — uncertainty is very much hurting risk sentiment,” he said.

Italian government bond yields jumped to a one-month high on Tuesday and Italian banking stocks dropped to a two-year low, hurt by risk aversion and concerns over the Italian budget.

Eurozone money markets no longer fully price in a 10-basis-point rate rise by the European Central Bank in 2019, indicating growing concern about the economic outlook in the region.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.2 per cent, with Samsung Electronics falling 2 per cent. In Japan, Sony Corp shed 3.1 per cent.

Nissan down

Japan’s Nikkei slipped 1.1 per cent, with shares of Nissan Motor Co tumbling more than 5 per cent after Ghosn’s arrest and reports he would be fired from the board this week.

Global stock markets have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions. Trillions of dollars were wiped off equities in a particularly torrid October.

In currencies, the dollar hovered near a two-week low against a basket of currencies.

Data released on Monday showed US home-builder sentiment recorded its steepest one-month drop in more than four years in November.

The dollar had also been undercut by Fed Vice-Chair Richard Clarida and Dallas Fed President Robert Kaplan, who raised concerns late last week about a possible global slowdown.