The Dow Jones Industrial Average fell more than 600 points on 12 October local time on the back of Apple shares and oil prices declining, the US dollar rising and uncertainty around global trade continuing.
Apple shares fell by 5%, a decline linked to a revised forecast from Lumentum, one of its key suppliers. Lumentum manufactures the technology used in the iPhone’s face-recognition function.
Lumentum cut its outlook for the fiscal second quarter 2019 after its CEO Alan Lowe said one of its major clients had asked the company to “materially reduce shipments” going forward. Shares in the company fell 33%.
Nasdaq unofficially closes down 2.82 percent, Dow Jones closes down 600 points, S&P 500 down 1.96 percent https://t.co/4qr4iw1IHx
— Reuters Business (@ReutersBiz) November 12, 2018
US Stock market slide continues
Donald Trump offered a novel theory on the market slide; he blamed his political opponents.
“The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!,” he wrote on Twitter.
Analysts have rejected this claim, however, and say the steady decline seen over the last month is more likely a correction after years of gains.
Amazon shares were also down, capping a bad day for tech giants. On Friday, the ‘big five’ most valuable tech companies in the US (Alphabet, Amazon, Apple, Facebook and Microsoft) lost a combined US$75 billion.
The Nasdaq Composite, a tech-heavy exchange, was down 2.8%.
The S&P also fell with Goldman Sachs shares down 7%, its worst drop in seven years. Shares in the investment bank and financial services company declined on the back of reports that Malaysia is seeking millions in refunds from the company for its part in the country’s state fund money-laundering fiasco.
MORE: Trump wants to reach a trade agreement with Chinese President Xi Jinping at the G-20 summit and has asked key U.S. officials to begin drafting potential terms, sources say https://t.co/RqL2pX4unu
— Bloomberg (@business) November 2, 2018
Trump looking to secure a trade deal with China
Meanwhile, the market is closely monitoring the leadup to Trump’s meeting with Chinese President Xi Jinping at the G20 summit, which takes place in Buenos Aires, Argentina later this month. Trump has been optimistic of securing a trade deal by the end of the summit.
Earlier in November, shares surged after Trump reported having a “long and very good conversation” with the Chinese leader.
Analysts have been more watchful. In a note to clients, Haibin Zhu, China Chief Economist at JP Morgan, said there was a better than even chance the two leaders would not come to an agreement.
“We remain cautious, as the challenge to address US-China conflict remains high,” Zhu said. “The US-China conflict extends beyond trade to areas such as technology, intellectual property rights, market access, industry policy, and ultimately centers on the competition between the two economic superpowers.”