S&P 500 suffered its worst day since June yesterday, pulled lower by Caterpillar after it cut its profit outlook, the latest high-profile company to warn about profit growth.
Technology shares came under pressure after a second day of weakness for Apple, the world’s most valuable public company. Shares fell 2.5 per cent to $673.54 as the company sold out of its initial supply of the new iPhone, raising concerns about keeping up with demand.
Caterpillar, the heavy equipment maker, said on Monday sluggish global growth was responsible for reduced estimates. Other companies to recently cut expectations include FedEx and Norfolk Southern.
Shares of Caterpillar were the biggest weight on the Dow for a second day and ended down 4.2 per cent.
Yesterday’s decline reversed earlier gains attributed to portfolio “window dressing” as the quarter ends. Stronger-than-expected figures on US consumer confidence also contributed to temporary gains.
This is “a market that has rallied and climbed a wall of worry. Right now the market is getting skittish and looking for reasons for buyers to be less aggressive,” said Jim Fehrenbach, head of equity distribution at Piper Jaffray.
The Dow Jones industrial average was down 101.37 points, or 0.75 per cent, at 13,457.55. The Standard & Poor’s 500 Index was down 15.3 points, or 1.05 per cent, at 1,441.59, its fourth day of losses. The Nasdaq Composite Index was down 43.06 points, or 1.36 per cent, at 3,117.73.
It was the S&P 500’s biggest percentage daily loss since 25 June and the biggest for the Nasdaq since 20 July.
The S&P 500 is up 2.5 per cent so far in September, historically a difficult month for the market, and recently hit the highest level in nearly five-years.
For the quarter, the S&P is up 5.8 per cent so far, with gains largely tied to the latest moves by the European Central Bank and the US Federal Reserve to stimulate their economies.
San Francisco Fed President John Williams said on Monday he expected the central bank to expand its bond-buying program next year to more aggressively combat the unemployment rate, but Philadelphia Fed president Charles Plosser countered yesterday saying that the latest monetary stimulus will not do much to boost economic growth or lower unemployment.
Economic data from the Conference Board showed US consumer confidence jumped to its highest in seven months in September.
Two separate reports showed home prices rose for another month in July, though the gains were not as strong as the previous month.