US stocks were lower on Tuesday, dragged down by Apple, as investors braced for an interest rate hike by the Federal Reserve next month and anxious about weakening demand in China.
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The S&P 500 had posted six weeks of gains.
On Monday, the S&P 500 fell 0.98%, while the Dow Jones turned negative for the year after sliding 1%, as investors remained cautious ahead of an increasingly likely December interest rates hike. The Nasdaq Composite dropped 1.01 per cent to 5,095.30.
Five minutes into trade on Monday, the Dow Jones Industrial Average was down 74.89 points (0.42 per cent) to 17,835.44.
In London trading, FTSE 100 index slid 1.68 to 6,352.15, while in Frankfurt the DAX index fell 42.53 or 0.4% to 10,946.95.
Apple suppliers Skyworks, Avago, Cirrus Logic and Qorvo were down between 3.7 percent and 7.0 percent.
The early weakness on Wall Street partly reflected concerns about the outlook for monetary policy following last Friday’s better than expected October jobs report.
Mikael Olai Milhøj, an analyst at Danske Bank, said, “Recent comments and speeches from FOMC members suggest that the doves are “ready to fly” as well, as they seem to support – or at least accept – the first Fed hike since 2006 at the next FOMC meeting in December”.
Only two Dow components rose. The euro zone currency has lost almost 3 percent against the dollar so far in November.
Today’s charts of the CBOE Interest Rate 10 Year T Note and PowerShares DB US Dollar Index Bullish (UUP) are more important than any index or stock chart.
Seven of the 10 major S&P sectors were higher on Tuesday, with the consumer discretionary sector’s (.SPLRCD) 0.82 percent advance leading the gainers, helped by an 0.86 percent increase in Walt Disney (DIS.N) and a 0.64 percent rise in Amazon.com (AMZN.O).
Stocks around the globe were also soft Tuesday. Chicago Federal Reserve President Charles Evans believes the jobs data is “very good news” and said that “strong wage growth would” play an important part in “pushing inflation up to 2 percent, which is what we need”.
Securities that bet on which way the Fed will move interest rates show roughly a 70 percent chance the central bank will raise rates.
The dollar rallied 0.3 per cent to US$1.0724 against the euro at 5pm in NY, the strongest level on a closing basis since April 15.
“The market giving back here is a reflection of weak growth”, said Nick Riach, CEO of The Earnings Scout. In Asia, stocks actually rose in a bet that Asian governments would be more proactive in helping their ailing economies than their European counterparts.
Rockwell Automation fell 3.4 per cent, the most in two months, after the industrial equipment and software provider warned of declining earnings and sales in 2016 amid weak industrial market conditions and a stronger dollar.
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Drugmaker Mallinckrodt fell $11.88, or 17 percent, to $58.01 after the short-selling firm Citron Research warned that the company might have issues similar to Valeant Pharmaceuticals.
