Wall Street dives into the red while oil prices continue to slide

Wall Street crumbled on Tuesday as fears for demand in the tech sector turned into a broader retreat from stocks while oil prices slid to an 11^th straight day of losses despite a Saudi offer to limit output.

European equities also closed lower with Frankfurt and Paris weighed down in part by lingering concerns over Italy’s high debt and Tuesday’s EU-deadline for Rome to revise its 2019 budget.

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Trading got off to a bad start in New York, with Apple shares declining after a key parts supplier said a client had cut orders significantly, stoking fears of waning demand for iPhones.

“The ecosystem of the supply chain around Apple is starting to feel the slide of demand,” Matt Miskin of John Hancock told AFP, noting that he still expected robust holiday season performance in the tech sector.

“With a weaker global growth, tech companies are starting to get repriced lower.” But a general rout ensued for stocks. Investment bank Goldman Sachs also fell 7.5 percent, weighing on the financial sector, while embattled engineering giant General Electric had its lowest close in nearly a decade.

The Dow and S&P 500 both lost two percent or more while the tech-heavy Nasdaq dropped 2.8 per cent. Shares in Apple closed down more than five percent.

Treasury bond markets closed for a public holiday.

By mid-afternoon, the broad-based slide prompted President Donald Trump to point the finger, while citing no evidence, at congressional Democrats, who won control of the House of Representatives in last week’s elections. 

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“The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!” he wrote on Twitter. Markets had rallied the day after the vote.

Meanwhile, Bloomberg reported that Trump was considering unveiling fresh auto tariffs, erasing gains by General Motors and helping push markets even lower.

Earlier in the eurozone, the Frankfurt and Paris stock markets had dropped as well, weighed down in part by lingering concerns over Italy’s high debt and Tuesday’s EU deadline for Rome to revise its 2019 budget.

The dollar continued to strengthen against its major rivals, meanwhile, hitting its highest levels since the first half of 2017.

The European Union’s chief Brexit negotiator warned ministers from the other 27 member states on Monday that no deal has been sealed on Britain’s departure from the bloc.

Elsewhere, Saudi Arabia’s energy minister called for a global output cut of a million barrels per day to re-balance the market, as Riyadh unveiled plans to trim its own production by 500,000 barrels per day from December.

Khalid al-Falih’s comments follow a meeting in Abu Dhabi at the weekend, where the OPEC group and its allies had already started laying the groundwork to reduce supply in 2019.

Benchmark crude prices still finished lower in New York and London. Oil prices have shed about one fifth of their value over the past month on oversupplies and signs of a softer-than-expected impact from US sanctions on Iranian crude exports.

Last week, higher US energy stockpiles drove WTI crude to its longest losing streak in more than 30 years, while Brent dropped below $70 a barrel for the first time since April.

Tobacco stocks also suffered following media reports that US health regulators expect to announce plans as soon as this week to seek a ban on menthol cigarettes and to limit sales of e-cigarettes.

British American Tobacco shedding 10.62 percent to 29.96 and Imperial Tobacco losing almost 2.2 percent on reports of a planned US ban on menthol cigarettes, which researchers have said pose a greater health risk than traditional ones.

American tobacco producers likewise headed south on the news.