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US stocks slide as Apple pulls tech companies lower

Published 28/04/2016

US stocks struggled amid worries about Apple
US stocks struggled amid worries about Apple

US stocks took their biggest loss in three weeks on Thursday after a late sell-off.

Apple, which is mired in a slump, fell to its lowest price in about two months and dragged the tech sector sharply lower.

Tech stocks, which rose early on thanks to earnings gains from Facebook and PayPal, slumped after billionaire investor Carl Icahn disclosed that he had sold his stake in Apple.

Mr Icahn was not a major shareholder in the tech giant, but his moves are closely watched by many investors.

The Dow Jones industrial average lost 210.79 points, or 1.2%, to 17,830.76. The Standard & Poor's 500 index fell 19.34 points, or 0.9%, to 2,075.81. The Nasdaq composite closed lower for the sixth day in a row, losing 57.85 points, or 1.2%, to 4,805.29. That index has struggled in part because Apple, the most valuable public company in the world, has fallen 15% in two weeks.

Earlier in the day, indexes had wavered between small gains and losses. Investors were surprised the Bank of Japan decided not to take further action to stimulate that nation's economy, and the yen continued to get stronger against the dollar.

"All they did was delay the inevitable," said Scott Wren, global equity strategist for Wells Fargo's Investment Institute. "All these global central banks, they're going to come out guns blazing" to stimulate their economies.

Meanwhile a handful of stocks moved on deal news. Most of those were in health care. In the largest, medical device maker Abbott Laboratories said it will buy St Jude Medical, combining Abbott's heart devices, heart valve products and infant formula business with St. Jude's heart failure and heart rhythm device products.

"Companies are on the hunt for ways to increase their profitability," said Mr Wren, of Wells Fargo. "One way to do that is to buy somebody else."

That task is made easier, he added, by low interest rates on loans and the fact that companies have been slashing their expenses for years.

The U.S. economy grew a bit less than expected in the first quarter. The government said gross domestic product increased just 0.5% as consumer spending slowed down, exports kept falling, and business investment plunged. That is the weakest result in two years, but experts think the economy will bounce back in the current quarter. It has followed that pattern over the last few years.

Bond prices continued to rise after a big gain on Wednesday. The yield on the 10-year U.S. Treasury note fell to 1.83% from 1.85%.

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