Tech Stocks Sink on Apple; Commodity Rout Resumes, Dollar Gains

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Current U.S. Market Rally Is Very Vulnerable: Hewson

Apple Inc.’s disappointing forecast sent technology stocks lower around the world, while a drop in commodities to a 13-year low dragged down mining shares. The dollar rose on the prospects for higher U.S. interest rates.

The Nasdaq 100 Index slid 1.1 percent at 4 p.m. in New York as Apple Inc.’s revenue forecast missed analysts’ estimates. The Standard & Poor’s 500 Index slid 0.2 percent. The dollar climbed to almost a four-month high, reinvigorating a selloff in commodities currencies, as housing data bolstered confidence in the U.S. economy. Oil approached a bear market and gold dropped below $1,100 an ounce.

While Apple’s 4.2 percent slide wiped more than $30 billion from its value, and its results hit shares of suppliers worldwide, positive results from Boeing to Chipotle Mexican Grill Inc. tempered declines in the S&P 500. BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, slumped as the selloff that started in gold spread to every part of the metals industry.

“Investors are cautious because some of the bigger names have missed expectations,” Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “The two giants reporting is what’s causing the weakness today. Earnings season really isn’t that bad.”

American Express Co. is among 27 S&P 500 companies releasing results on Wednesday. Of the companies in the gauge that have reported, 74 percent have beaten profit estimates, according to data compiled by Bloomberg.

Housing Data

A report Wednesday indicated sales of existing U.S. homes climbed 3.2 percent to an eight-year high in June, while prices rose to a record. That bolstered the case for higher interest rates, sending the Bloomberg Dollar Spot Index higher by 0.3 percent, close to the highest since March.

The greenback advanced versus Norway’s krone, the Brazilian real and the dollars of Canada and New Zealand on speculation sliding commodity prices will necessitate further stimulus in resource-exporting nations.

Commodities producers around the globe tumbled as the selloff in the assets spread from gold to copper and tin, which fell as much as 4.9 percent. The Bloomberg Commodity Index of 22 raw materials resumed declines, falling 1.1 percent to the lowest since June 2002.

Bullion for immediate delivery slipped 0.9 percent to $1,091.51, while futures sank 1.2 percent in the U.S. in the longest declining streak since 1996.

Goldman Sachs Group Inc predicted gold may drop below $1,000 an ounce, underscoring a structural bear market in commodities.

Negative Feedback

“We think we are in a structural bear market, not only in gold, but across the commodity complex,” said Goldman’s Jeffrey Currie. “The individual commodity stories are reinforcing to one another, creating a negative feedback loop.”

West Texas Intermediate crude retreated 3.3 percent to settle at $49.19 a barrel, the lowest close since April 2. The grade has fallen almost 20 percent in six weeks. Brent slipped 91 cents to end at $56.13.

The disappointing technology results knocked cold the biggest rally for the Nasdaq 100 since October, and left Apple with one of its worst-ever slides in market value just five days after Google Inc.’s earnings spurred the largest one-day wealth creation by any U.S. stock.

Hopes were high for the industry as earnings season began, with technology shares leading a rebound in U.S. equities after overseas tensions eased. The Nasdaq Composite Index rallied to an all-time high on July 17 after Google surged 16 percent, adding $65 billion to its market capitalization.

“It seems that the expectations are a little bit too high on the tech sector,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “The last weeks have been pretty good for the markets and everyone was a little over excited so it seems we’re going to be a bit more cautious over the next couple of days.”

Supplier Selloff

Apple’s forecast sparked a selloff in the iPhone maker’s suppliers: Cirrus Logic Inc. and Skyworks Solutions Inc. slid at least 4.5 percent, while European chip supplier Dialog Semiconductor Plc slumped 5.2 percent and Infineon Technologies AG lost 6.3 percent. China’s AAC Technologies Holdings Inc. and Taiwan’s Compal Electronics Inc. tumbled at least 6 percent.

Microsoft Corp. dropped 3.9 percent after the company reported its biggest-ever loss. Yahoo! Inc. lost 1.4 percent after forecasting sales in the current quarter below analysts’ estimates.

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