Stocks opened in negative territory under the weight of Apple (AAPL) shares, which were lower following a profit warning from a supplier of iPhone sensors. The weakness spread to other tech companies and the Nasdaq crumbled under the pressure, falling roughly 2%. Oil prices are higher for the first time in 11 sessions after OPEC said they would plan a strategy to cut oil production.
ECONOMIC EVENTS: In the U.S., no economic data of note was reported. In energy news, WTI crude oil prices are rising after the OPEC countries pledged to reduce output beginning in the fourth quarter and media reports indicated that Russia does not seem to be opposed to the plan.
COMPANY NEWS: Shares of Apple have been pressured, falling over 4%, after supplier Lumentum Holdings (LITE) cut its outlook. While Lumentum did not call out Apple by name, its mention of a request from one of its "largest Industrial and Consumer customers for laser diodes for 3D sensing" to "materially reduce shipments" is widely believed to be referring to the iPhone maker. Adding weight to Apple shares were more bearish stances from two Wall Street analysts. JPMorgan analyst Samik Chatterjee trimmed his earnings estimates as he now forecasts modest year-over-year declines in iPhone shipments for both 2018 and 2019 on account of a weaker macro backdrop in emerging markets. Bernstein analyst A.M. Sacconaghi told investors that his analysis suggests that iPhone units could fall by 6% per year for three years if average replacement cycles extend 6 months. Meanwhile, shares of Lumentum have plunged 31%.
Alibaba (BABA) reported $30.8B in gross merchandise value for its latest Singles Day, which is a new record for the selling festival but also represents a deceleration to 27% year-over-year from the 39% growth rate reported last year.
Shares of PG&E (PCG) and Edison International (EIX) are sliding as California wildfires rage on. The Camp Fire, which began in the former's service territory, has now claimed the lives of over 30 people, according to media reports.
In M&A news, SAP (SAP) announced a deal to acquire Qualtrics, a provider of experience management software that had been set to come public via an IPO later this week, for $8B in cash. Athenahealth (ATHN) announced it has agreed to be acquired by Veritas Capital and Evergreen Coast Capital for $135 per share in cash, or approximately $5.7B. SAP shares trading in New York are down 6% following the deal announcement.
MAJOR MOVERS: Among the noteworthy gainers was Apptio (APTI), which rose 51% after it agreed to be acquired by Vista Equity Partners for $38 per share. Also higher was Opko Health (OPK), which gained 23% after reporting quarterly results.
Among the notable losers was British American Tobacco (BTI), which slid 7.5% after the Wall Street Journal reported that the Food and Drug Administration is planning to propose a ban on menthol cigarettes. Also lower was GNC Holdings (GNC), which fell 18% after reporting quarterly results.
INDEXES: Near midday, the Dow was down 403.56, or 1.55%, to 25,585.74, the Nasdaq was down 155.15, or 2.09%, to 7,251.75, and the S&P 500 was down 36.16, or 1.3%, to 2,744.85.
