S&P 500 an heavyweight, Apple Inc. (AAPL.O), saw its shares fall 2.9%, marking the company’s second straight day of losses, on news that China has tightened its regulations on iPhone use by state officials and ordered some central government employees to stop using their phones while at work.
Apple was the biggest drag on Thursday’s dip in the S&P 500 and Nasdaq, while semiconductor stocks also fell as a result of concern over China’s iPhone limitations. Concerns about interest rates and persistent inflation increased despite a decline in weekly U.S. unemployment claims.
Shares of S&P heavyweight Apple Inc (AAPL.O) dropped 2.9%, marking the company’s second straight day of losses, after it was revealed that China had increased restrictions on the use of
iPhones by public employees and had ordered some central government employees to stop using their phones while at work.
According to Bloomberg, China intended to extend the iPhone ban to government businesses and organizations.
S&P 500 technology sector (.SPLRCT) experienced the most percentage decrease among the benchmark’s 11 key sectors, falling 1.6% as a result of Apple, its suppliers, and businesses with significant exposure to China.
According to a study from the U.S. Labor Department, Americans filed 216,000 jobless claims for the week ending September 2, which was the fewest since February. But, investors were concerned
that this would encourage the Federal Reserve to maintain its tight monetary policy, which would pressure stocks.
Wedbush Securities managing director and head of stock trading Sahak Manuelian said, “The weekly claims was major news this morning, good news being taken as bad news and it’s impossible to ignore the news out of China” concerning Apple.
The August inflation data, which are due in a week, were also being cautiously anticipated by investors.
Manuelian noted that “some investors are concerned that inflation might start to ramp up again, which isn’t crazy,” which is partly attributable to the recent steep increase in oil prices.
According to the CME Group’s FedWatch Tool, wagers on the Fed maintaining interest rates steady in September stood at 93%, but the likelihood of another pause at the November meeting was significantly lower, at 53.5%.
“The Federal Reserve can thread monetary policy through that incredibly narrow eye of the needle by keeping it sufficiently tight but not too tight as to devastate the economy. According to Edward
Jones’ head of investment strategy, Craig Fehr, the decrease on Thursday was “a cautious defensive attitude. It’s a small eye, but it’s not fully closed.”
Prior to the market’s closure, John Williams, president of the New York Fed, stated that it was still “up for debate” whether or not monetary policy is sufficiently restrictive to restore the economy’s
equilibrium. He pointed to impending data releases due before the Fed’s September meeting and said, “We’ve got policy in a decent place, but we’re going to need to continue to be data reliant.”
A gain of 57.54 points, or 0.17%, lifted the Dow Jones Industrial Average (.DJI) to 34,500.
S&P 500 (.SPX) dropped 14.34 points, or 0.32%, to 4,451.14 and Nasdaq Composite (.IXIC) down 123.64 points, or 0.89%, to 13,748.83 on day 73.
The Dow outpaced the S&P and Nasdaq because Apple is weighted less heavily in the price-weighted cyclicals-heavy index than it is in the market capitalization-weighted S&P 500 (.SPX), which also includes Apple as one of its top weights.
The largest gainer among S&P sectors was defensive utilities (.SPLRCU), up 1.3%, which Edward Jones’ Fehr interpreted as further indication of the market’s risk-off mindset.
The shares of Apple suppliers Skyworks Solutions (SWKS.O), Qualcomm (QCOM.O), and Qorvo (QRVO.O), among others, all dropped more than 7%, while the Philadelphia semiconductor index (.SOX) dropped by 1.98%.
The news from China, according to Cherry Lane Investments partner Rick Meckler, has brought investors’ attention back to the notion that “the relationship between the U.S. and China is a huge danger to present equities valuations, particularly in technology.”
Data showed that China’s exports and imports decreased in August, further dampening confidence toward the second-largest economy in the world.
PDD Holdings (PDD.O), JD.com, and Alibaba, all Chinese companies with US listings, all had their shares drop by more than 4%, while Baidu fell by 3.4%.
A 1% increase in McDonald’s (MCD.N) shares after Wells Fargo upgraded the stock to “overweight” also contributed to keeping the Dow afloat.
On the strength of an optimistic annual revenue projection, automation software company UiPath (PATH.N) saw an 11.5% increase.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a ratio of 1.80 to 1; on the Nasdaq, the ratio was 2.03 to 1.
The Nasdaq Composite recorded 22 new highs and 268 new lows, while the S&P 500 recorded 13 new 52-week highs and 26 new lows.
9.76 billion shares were traded on U.S. exchanges, which is lower than the 20-session moving average of 10.10 billion.