Friday 20th October 2017
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Wall Street slid from record highs as shares of Apple declined amid reports of weaker-than-expected appetite for its iPhone 8.
In 2.28pm trading in New York, the Dow Jones Industrial Average slipped 0.1 percent, while the Nasdaq Composite Index declined 0.5 percent. In 2.14pm trading, the Standard & Poor’s 500 Index fell 0.1 percent.
“On the equities side, it does really feel like we’re probably overdue for some kind of a correction,” Michael Hanson, the chief US macro strategist at TD Securities in New York, told Bloomberg. The 30th anniversary of the so-called Black Monday crash could also be weighing on investor sentiment, he added.
US Treasuries rose, pushing yields on the 10-year note three basis points lower to 2.32 percent.
The Dow fell as slides in shares of Apple and those of Goldman Sachs, recently down 2.7 percent and 0.9 percent respectively, outweighed gains in shares of General Electric and those of Verizon, recently up 2.3 percent and 1.9 percent respectively.
Shares of Apple dropped amid concern about lower-than-expected demand for its iPhone 8 amid reports that Apple slashed orders for its latest model, which went on sale last month, by more than 50 percent. Apple is set to release the iPhone X next month.
“The Street is hyper-sensitive to any speed bumps around this next iPhone cycle and (that) speaks to the knee-jerk reaction we are seeing in shares,” Daniel Ives, chief strategy officer at research house GBH Insights in New York, told Reuters.
“iPhone 8 demand has been naturally soft out of the gates with the main event being the iPhone X launch in early November,” according to Ives. But “this is the early innings of what we believe is the biggest iPhone product cycle with X leading the way.”
Disappointing quarterly results also weighed on the mood. Shares of United Continental Holdings sank, down 10.5 percent as of 2.38pm in New York, after the airline offered a profit outlook that failed to meet expectations.
Meanwhile, shares of Verizon rose after the US wireless provider reported better-than-expected quarterly revenue as well as phone subscriber growth.
“We attribute the Verizon wireless strength to both their network advantage and the competitive landscape being levelled with everyone selling unlimited data,” Kevin Roe, an analyst with Roe Equity Research, told Bloomberg.
In Europe, the Stoxx 600 Index ended the session with a 0.6 percent slide from the previous close. The UK’s FTSE 100 Index eased 0.3 percent, as did France’s CAC 40 Index, while Germany’s DAX Index fell 0.4 percent.
Nestle shares declined, closing 1 percent weaker in Zurich, after the world’s largest food company boosted its forecast for restructuring costs.
Nestle may spend close to 1 billion Swiss francs (US$1 billion) on business reorganisation this year, Chief Financial Officer Francois-Xavier Roger said on a call with reporters Thursday, Bloomberg reported.
In a statement, the company said its structural savings initiatives “are progressing faster than originally planned,” leading to an additional increase of 400 million to 500 million Swiss francs in restructuring and related expenses in 2017.
“Improving our efficiency is a key priority," Mark Schneider, Nestlé CEO, said in the statement. "We have identified further opportunities to accelerate our margin improvement, leading to a further increase in restructuring and related expenses in 2017."
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