Tech Sector Beatdown Weighs on Major U.S. Stock Indexes

U.S. equity markets were down sharply last week with most of the losses being fueled by a strong downturn in the technology sector. Individual issues continued to weigh on the markets with shares of Apple, Amazon and Netflix posting steep losses.

Facebook was also a big loser last week, falling nearly 4 percent. The social media giant continues to face selling pressure in reaction to a New York Times article that revealed how the company ignored and then tried to hide that Russia used the platform to disrupt the U.S. election in 2016.

In the cash market, the benchmark S&P 500 Index settled the week at 2736.27, down 1.6% for the week. It is still up 2.3% for the year. The blue chip Dow Jones Industrial Average finished at 25413.22, down 2.2%. It’s up 2.8% in 2018. The tech-driven NASDAQ Composite ended the week at 7246.73, down 2.1%. It’s up 5.0% this year.

Apple Posts Worst Week in Seven Months

Although the S&P 500 Index and Dow posted higher finishes on Friday, risk-off sentiment was the theme all week. Shares of Apple, which is a component of all three major indexes, including 12% of the NASDAQ Composite and 5% of the Dow Jones Industrial Average, had its worst week since April. Apple finished the week down 5% and is now down 16% of its recent high. Early in the week, it even briefly touch bear market territory.

The catalysts behind the selling pressure were concerns about disappointing iPhone sales and slower growth. Apple also closed lower for the seventh consecutive week, its longest losing streak since 2012.

Energy Market Volatility Weighs on Stocks

Volatility continued to plague the crude oil market last week, however rising gasoline prices helped support higher consumer inflation in October. The six-week plunge in crude and gasoline, however, should have an opposite effect on inflation in November. Nearby crude oil fell 3.68% and is now down nearly 25-percent from its October 3 high.

Rise in Consumer Inflation Reported

The U.S. government reported last week that consumer inflation met expectations, helping to dampen fears of overheating inflation and a faster pace of Fed rate hikes. The consumer price index (CPI) report showed that inflation inched slightly higher in October, with consumer prices rising 2.5% over the past year.

Geopolitics Also Influences Price Action

Internationally, a draft deal for the withdrawal of the United Kingdom from the European Union was reached, but that plan may have trouble surviving Parliament. Additionally, cabinet defections in Prime Minister Theresa May’s government are pointing to continued uncertainty.

Last week’s events have raised fears that the U.K. could soon exit the European Union without a divorce deal. This so-called “hard Brexit” helped trigger the British Pound’s biggest one-day loss against the Euro since October 2016.