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US STOCKS-Nasdaq falls 2 pct as Apple, chip stocks hit by weak forecasts

Published 2018/11/12, 19:23
Updated 2018/11/12, 19:30
© Reuters.  US STOCKS-Nasdaq falls 2 pct as Apple, chip stocks hit by weak forecasts

* Apple shares dip, other iPhone suppliers also hit

* Lumentum plunges after slashing outlook

* Tobacco stocks down after report on ban on menthol cigarettes

* Indexes down: Dow 1.76 pct, S&P 1.60 pct, Nasdaq 2.57 pct

(Changes comment, adds details, updates prices)

By Sruthi Shankar

Nov 12 (Reuters) - The Nasdaq Composite index fell about 2.5 percent on Monday, hit by a slump in Apple Inc AAPL.O shares after two suppliers cut their forecasts, sparking a selloff in other iPhone component makers and weighing on technology stocks in general.

Apple shares AAPL.O fell 4.7 percent to $209.67, their lowest since July 27, after Lumentum Holdings Inc LITE.O , the main supplier for Face ID technology, and screen maker Japan Display Inc 6740.T cut their forecasts. plunged 31 percent and dragged down other Apple suppliers, many of them chipmakers such as Cirrus Logic Inc CRUS.O , Qorvo Inc QRVO.O and Skyworks Solutions Inc SWKS.O .

The technology sector .SPLRCT , which has fueled much of the U.S. stock market's bull run, fell 3.3 percent, while the Philadelphia SE Semiconductor index .SOX dropped 4.4 percent.

"The valuation in tech sector could potentially go lower and the semiconductors are really going to weigh in the near-term, especially with the fresh releases in numbers and the China situation," said Lindsey Bell, investment strategist at CFRA Research in New York.

"You always have regulation concern with tech, and with semis, we're hitting a low with the business cycle and that's a big concern."

Earlier, a rebound in oil prices had offered some relief to energy stocks, but they succumbed to the broader selling pressure, with the S&P energy index .SPNY down 1.3 percent.

At 11:51 a.m. ET the Dow Jones Industrial Average .DJI was down 456.55 points, or 1.76 percent, at 25,532.75, the S&P 500 .SPX was down 44.59 points, or 1.60 percent, at 2,736.42 and the Nasdaq Composite .IXIC was down 190.64 points, or 2.57 percent, at 7,216.27.

A holiday in the U.S. bond markets for Veterans Day could keep trading volumes muted, analysts said.

"With the bond market closed, there is a lack of catalyst to push the market higher," said Bell.

Nine of the 11 major S&P sectors were lower, with slight gains seen in the defensive real estate .SPLRCR and utilities .SPLRCU sectors.

Goldman Sachs Group Inc (NYSE:GS) GS.N fell 5.8 percent, the most on the Dow. The financial sector .SPSY declined 1.6 percent.

Altria Group (NYSE:MO) Inc MO.N fell 1.8 percent and Philip Morris International Inc (NYSE:PM) PM.N dropped about 1.2 percent after the Wall Street Journal reported that the U.S. health regulator is planning to ban menthol cigarettes. Inc ATHN.O rose 9.7 percent after private equity firm Veritas Capital and hedge fund Elliott Management agreed to acquire the healthcare software maker for $5.5 billion in cash. issues outnumbered advancers for a 2.41-to-1 ratio on the NYSE and a 3.05-to-1 ratio on the Nasdaq.

The S&P index recorded 28 new 52-week highs and 10 new lows, while the Nasdaq recorded 13 new highs and 113 new lows.

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