Apple Woes Send Stocks Swooning as Treasuries Jump: Markets Wrap

(Bloomberg) -- U.S. stocks sank after a factory gauge dropped the most in a decade and Apple cut its sales outlook, adding to concern that global growth is slowing. Treasuries rallied and the yen strengthened.

The S&P 500 Index tumbled 2.5 percent for the steepest sell-off since Christmas Eve, when the gauge fell within a few points of a bear market before embarking on a 6.8 percent rally over the next five sessions. Apple plunged the most since 2013 after citing an unforeseen slowdown in China for its woes. Ten-year Treasury yields sank to an 11-month low after a measure of U.S. manufacturing plunged last month by the most since October 2008. Bristol-Myers Squibb’s bid to buy Celgene and a strong reading on private hiring for December were shrugged off by bearish investors.

“Corporate America is getting cold feet about the outlook,” said Chris Rupkey, the chief financial economist at MUFG Union Bank in New York. “That’s what the stock market is saying with new selling and new lows after the manufacturing survey’s release.’

Here are the major stocks moves:

• Apple ended the day down 10 percent.
• Twenty-nine of 30 chipmakers in the Philadelphia Semi index fell, with Qorvo, Skyworks and Broadcom each off at least 8 percent.
• 3M, Caterpillar and DowDuPont dropped at least 3 percent.
• Bristol-Myers sank 14 percent, while Celgene jumped to the highest since October.
• Airlines tumbled after Delta cut its revenue forecast. American was off 7.5 percent.

In currency markets, the yen jumped as algorithmic programs amplified sharp gyrations amid thin liquidity during a Japanese holiday. Bloomberg’s dollar index fell.

The weak ISM factory reading adds to anxiety spurred by poor data from China and Europe a day earlier, stoking fear that a recession looms larger than previously thought. Apple and Delta join a growing list of companies warning that the trade war and political turmoil may be weighing on corporate profits. Dysfunction in Washington continues, meanwhile, with leaders unable to strike a deal to end a partial shutdown of the federal government.

“Trade disputes are seeping into the real economy globally,” said Brett Ryan, senior U.S. economist for Deutsche Bank Securities. “The policy uncertainty will eventually cause a slowdown, and you’re finally at that point now.”

Here are some events investors may focus on in coming days:

• The U.S. December jobs report is due Friday
• Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance.

And these are the main moves in markets:

Stocks

• The S&P 500 fell 2.5 percent at the close of trading in New York.
• The Nasdaq 100 retreated 3.4 percent, while the Dow Jones Industrial Average slid 662 points.
• The Stoxx Europe 600 Index lost 1 percent.
• Germany’s DAX Index sank 1.6 percent on the first retreat in a week.
• The MSCI Emerging Market Index declined 0.6 percent.
• The Nikkei-225 Stock Average fell 0.3 percent.

Currencies

• The Bloomberg Dollar Spot Index dipped 0.5 percent.
• The euro advanced 0.5 percent to $1.1399.
• The British pound rose 0.2 percent to $1.2636.
• The Japanese yen jumped 1.2 percent to 107.57 per dollar, the strongest in more than eight months.

Bonds

• The yield on 10-year Treasuries fell six basis points to 2.56 percent.
• Germany’s 10-year yield fell one basis point to 0.15 percent.
• Italy’s 10-year yield climbed 17 basis points to 2.86 percent.

Commodities

• West Texas Intermediate crude rose 1.3 percent to $47.16 a barrel.
• Gold advanced 0.7 percent to $1,293.61 an ounce, reaching the highest in almost seven months on its sixth consecutive advance.

--With assistance from Garfield Reynolds, Rishaad Salamat, Yvonne Man, Andreea Papuc and Yakob Peterseil.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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