CHINA’S surprise currency devaluation hit companies with a big exposure to the country and added to worries about the global economic outlook, pushing stocks down yesterday.
The Dow Jones industrial average fell 212.33 points, or 1.21 per cent, to 17,402.84, the S&P 500 lost 20.11 points, or 0.96 per cent, to 2,084.07 and the Nasdaq Composite dropped 65.01 points, or 1.27 per cent, to 5,036.79.
Apple fell 5.2 per cent to $113.54 in its biggest daily percentage decline since late January 2014, and the stock was the biggest drag on all three major indexes.
Jefferies raised concerns about the demand for the iPhone, primarily in China.
Among other companies with a big exposure to China, Caterpillar was down 2.6 per cent at $78.04. Yum Brands fell 4.9 per cent to $83.54.
General Motors shares fell 3.5 per cent to $30.83, though it said the devaluation of the yuan would have a “limited and manageable” impact on its business.
Alibaba shares fell 3.9 per cent to $77.34.
“Obviously this devaluation seems to suggest there’s a lot of weakness, and we’re in thinly-traded markets right now,” said Eric Kuby, chief investment officer at North Star Investment Management.
“To a certain extent, the stocks that have propped up the market this year have slowly fallen out of favour, so I think that you’re seeing a little bit of a flight to safety.”