Stocks fall as Apple warning raises China virus concerns
NEW YORK (AP) — U.S. stocks fell in midday trading Tuesday after technology giant Apple became the most well-known company to warn of a financial hit from the virus outbreak in China.
The maker of iPhones said it will fall short of its revenue forecasts in the fiscal second quarter because production has been curtailed and consumer demand for iPhones has slowed in China. Apple's stores there are are either closed or operating on reduced hours.
Technology stocks led the selling. Apple shed 2.7%. Chipmakers, which also rely heavily on China for sales and supplies, broadly slid. Intel shed 1.9%.
Banks and energy stocks also fell. HSBC said it will cut 35,000 jobs and shed $100 billion in assets. Its shares dropped 5.6%. Wells Fargo slid 3.4% and Schlumberger slipped 4.2%.
Bond prices rose. The yield on the 10-year Treasury fell to 1.54% from 1.58% late Friday. Crude oil prices fell 1.1%.
Utilities held up better than most of the market.
KEEPING SCORE: The S&P 500 index fell 0.7% as of 11:44 a.m. Eastern time. The Dow Jones Industrial Average fell 270 points, or 0.9%, to 29,121. The Nasdaq fell 0.5%. The Russell 2000 index of smaller company stocks fell 0.6%. European and Asian markets fell.
CHINA OUTBREAK: The viral outbreak that began in China has now infected more than 73,000 people and continues to hurt businesses worldwide. The majority of the cases and deaths remain centered in China.
Businesses continue to feel the economic impact from the virus. The Beijing auto show, the industry's biggest global event of the year, is being postponed indefinitely from its April date. Apple is the latest company to warn investors that the virus will hurt their financial performance.
Technology and health care companies have been the most vocal about mentioning the new coronavirus in their earnings conference calls, according to FactSet.
LOTS OF BENJAMINS: Financial services company Franklin Resources rose 4.2% after saying it is buying competitor Legg Mason for $4.5 billion. The deal will create a financial company with a combined $1.5 trillion in assets under management. Legg Mason shares rose 23.6%.
WEEK AHEAD: Investors face a shortened week because of Monday's President’s Day holiday, but there are still several key earnings and economic reports on tap.
More than three-quarters of the S&P 500 has already reported financial results, and 51 companies are scheduled to release results this week. Devon Energy and Concho Resources will report their results later Tuesday. Progressive will report results on Wednesday and ViacomCBS will report on Thursday.
The government will release its producer price index for January on Wednesday, along with housing starts data.