Nasdaq 100 Down 1% as Apple Leads Megacap Rout: Markets Wrap

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Rita Nazareth

07 Sep 2023, 09:56 PM IST

Times Square is reflected in the window of the Nasdaq MarketSite in New York, US, on Friday, June 30, 2023. The blowout rally in tech megacaps gained further traction on Friday, with the Nasdaq 100 poised to notch a record first-half of a year. Photographer: Victor J. Blue/Bloomberg

(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 rose, while the dollar fluctuated.

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. fell, while fellow megacaps Tesla Inc. and Nvidia Corp. slipped at least 2%.

“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.

Bonds, Dollar

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 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. Emerging-market currencies came within a whisker of erasing all of this year’s gains. Oil prices were little changed 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.
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. 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
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.
Walmart Inc. rose on news the company has lowered its starting pay for some new hires as part of a revamped wage structure that took effect in July.
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 between Chevron Corp. and labor unions in Australia are set to drag into Friday — keeping natural gas markets on edge — as unions said a deal to avert strikes is unlikely.
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.