Apple turns sour overnight
Wall Street fell amid concern that stock market darling Apple is facing headwinds, fanning concern that other companies might struggle with demand for their products and services too.
Shares of Apple sank on reports that it's slowing down production of its iPhone 5, increasing worries the appeal of some of its products is waning.
The stock was last down 3.3 percent at US$503.35, compared with a record high of US$705 reached in September.
Apple slashed its original target to order 65 million iPhone 5 displays this quarter by about half, Nikkei reported, citing an unidentified senior executive at a component maker it didn't name.
"Apple is the story for the market," James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, told Bloomberg News. "It brings fear that if Apple's doing something, the other companies and industries would be doing the same. That makes it even more important for investors to watch corporate guidance or CEO's expectations."
Fourth-quarter earnings expectations are extremely modest. Overall earnings are expected to increase by 1.9 percent in this reporting period, according to Thomson Reuters data.
In afternoon trading in New York, the Standard & Poor's 500 Index fell 0.26 percent while the Nasdaq Composite Index dropped 0.44 percent. The Dow Jones Industrial Average gained 0.05 percent.
Meanwhile, President Barack Obama today warned Congress that a refusal to lift the US debt ceiling would hurt the economy and could send markets "haywire".
"It would be a self-inflicted wound on the economy," Obama said at a news conference.
Federal Reserve Chairman Ben Bernanke is set to speak later today at the University of Michigan.
In Europe, the Stoxx 600 Index finished the session with a 0.4 percent drop from the previous close. The UK's FTSE 100 also declined, closing 0.2 percent lower. However, France's CAC 40 eked out a gain of just under 0.1 percent, and Germany's DAX rose 0.2 percent.
While investors and European Union leaders alike agree that the sovereign debt crisis has abated, there are still plenty of signs of struggle ahead. Industrial production in the euro zone unexpectedly fell in November, sliding 0.3 percent from October, according to the European Union's statistics office.
Investors are gearing up for further government debt auctions this week.
Spain said it will auction bonds maturing in 2015, 2018 and 2041 on January 17, while Italy said it will sell a new 15-year benchmark security for the first time in two years, according to Bloomberg.
Shares of TNT Express sank 41 percent after United Parcel Service decided to drop its plans to take over the company after EU officials told it that the deal would be blocked.
By Margreet Dietz - BusinessDesk
