Apple, Philip Morris, chips lead slide on Wall Street

(Reuters) – U.S. stocks fell on Thursday, as technology stocks from Apple to chipmakers declined following a weak forecast on smartphone demand, while a sharp drop in Philip Morris’s (PM.N) shares after results weighed on the consumer staples sector.

Traders work on the floor of the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., April 19, 2018. REUTERS/Brendan McDermid

A warning from Taiwan Semiconductor (TSMC) (2330.TW), the world’s largest contract chipmaker and Apple supplier, on soft demand for smartphones and on the semiconductor industry’s growth this year sparked a tumble in chip stocks.

Apple’s (AAPL.O) shares also fell 2.4 percent, with analysts telling Reuters that TSMC’s warning was related to the iPhone maker. Apple was the biggest drag on the Dow Jones Industrial Average and the Nasdaq.

TSMC’s (TSM.N) U.S.-listed shares fell 5.8 percent. Intel (INTC.O) declined 3.1 percent, falling the most on the Dow. All the stocks on the Philadelphia SE semiconductor index .SOX were in the red, with the index itself tumbling 3.9 percent.

“The broader tech weakness that you’re seeing is out of out weak guidance that’s impacting Apple and the semi-conductor space,” said Michael Hans, chief investment officer at New York City-based Clarfeld Financial Advisors.

Traders work on the floor of the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., April 19, 2018. REUTERS/Brendan McDermid

The only bright spot was the financial sector .SPSY, which was up 1.2 percent, supported by American Express (AXP.N) shares and a rise in 10-year Treasury yields to a near two-month high. [US/]

“Given that we’ve seen considerable rise in rates and a steeper curve, by one of the largest margins that we’ve seen in the several weeks, and that’s been really benefiting the financials,” Hans said.

The S&P consumer staples sector .SPLRCS declined 3.5 percent as Philip Morris plunged 16.5 percent after the tobacco company’s weak results and forecast.

Philip Morris was the biggest drag on the S&P 500 and also dragged rival Altria (MO.N) down 7.8 percent.

Procter & Gamble (PG.N) also dropped 3.2 percent after the Dow component said shrinking retailer inventories and higher commodities and transportation costs squeezed its margins.

At 12:42 p.m. ET, the Dow .DJI was down 0.50 percent, at 24,623.67. The S&P 500 .SPX fell 0.79 percent to 2,687.12 and the Nasdaq Composite .IXIC dropped 0.87 percent to 7,231.51.

AmEx (AXP.N) jumped 6.2 percent after the credit card issuer topped Wall Street profit estimates.

“What’s happening in this season is even if you meet (profit expectations), that’s not good enough, you’ve got to beat convincingly,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Of the 52 companies among the S&P 500 that have reported first-quarter earnings through Wednesday, 78.8 percent topped profit expectations, according to Thomson Reuters data.

Declining issues outnumbered advancers by a 2.56-to-1 ratio on the NYSE and by a 1.70-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and 14 new lows, while the Nasdaq recorded 82 new highs and 40 new lows.

Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta

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