Market Wrap: Wall Street Falls After China Devaluation
NEW YORK -- U.S. stocks fell Tuesday as China's surprise devaluation of the yuan currency hit companies with a big exposure to the country and added to worries about the global economic outlook.
Apple fell 5.2 percent to $113.54 in its biggest daily percentage decline since late January 2014, and the stock was the biggest drag on all three major indexes. Jefferies raised concerns about the demand for the iPhone, primarily in China.
%VIRTUAL-pullquote-Obviously this devaluation seems to suggest there's a lot of weakness, and we're in thinly traded markets right now.%Among other companies with a big exposure to China, Caterpillar (CAT) was down 2.6 percent at $78.04. Yum Brands (YUM) fell 4.9 percent to $83.54. General Motors (GM) shares fell 3.5 percent to $30.83, though it said the devaluation of the yuan would have a "limited and manageable" impact on its business.
The currency move by the world's top metals consumer pushed copper and aluminum to six-year lows, and the S&P materials index dropped 1.9 percent, leading sector declines for the S&P 500. Freeport-McMoRan dropped 12.3 percent to $10.22.
"Obviously this devaluation seems to suggest there's a lot of weakness, and we're in thinly traded markets right now," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.
"To a certain extent, the stocks that have propped up the market this year have slowly fallen out of favor, so I think that you're seeing a little bit of a flight to safety."
The Dow Jones industrial average (^DJI) fell 212.33 points, or 1.2 percent, to 17,402.84, the Standard & Poor's 500 index (^GSPC) lost 20.11 points, or 1 percent, to 2,084.07 and the Nasdaq composite (^IXIC) dropped 65.01 points, or 1.3 percent, to 5,036.79.
The yuan fell to its lowest against the dollar in almost three years following what China's central bank described as a "one-off depreciation."
Alibaba (BABA) shares fell 3.9 percent $77.34.
The day's stock market declines followed a rally Monday that gave the S&P 500 its biggest increase since May.
Google (GOOG) rose 4.3 percent to $660.78 after it said it would overhaul its operating structure. The stock gave the biggest support to the Nasdaq and the S&P 500.
Declining issues outnumbered advancing ones on the NYSE by 1,932 to 1,152, for a 1.68-to-1 ratio; on the Nasdaq, 1,967 issues fell and 848 advanced, for a 2.32-to-1 ratio favoring decliners. The S&P 500 posted 10 new 52-week highs and 17 new lows; the Nasdaq recorded 40 new highs and 104 new lows.
-Sweta Singh contributed reporting from Bangalore.
What to watch Wednesday:
- The Labor Department releases job openings and labor turnover survey for June at 10 a.m. Eastern time.
- The Treasury Department releases federal budget for July at 2 p.m.
These selected companies are scheduled to release quarterly financial results.