Apple leads market slump
Stocks see worst day since July after iPhone maker’s update glitch
NEW YORK – A stumble by Apple set off the worst rout in the stock market since July on Thursday.
Apple dropped nearly 4 percent following its announcement late Wednesday that it had pulled a software update that prevented users from making phone calls. Other technology stocks also slumped.
The selling started early and picked up strength in the afternoon. By the close of trading, all 30 big companies in the Dow Jones industrial average and the 10 industries in the Standard & Poor’s 500 index lost ground.
Most investors said the drop wasn’t a sign of worry because the forces behind the market’s long rally remain in place. It was only a week ago that the S&P 500 touched a record high, and strong runs are usually followed by short breaks. The index has lost 2 percent this week but is still up 6 percent for the year.
“There’s just an absence of real news to chew on,” said Mark Luschini, the chief investment strategist at Janney Montgomery Scott. “When you’re at a peak, markets need more and more good news to keep climbing.”
The S&P 500 index lost 32.31 points, or 1.6 percent, to close at 1,965.99.
The Dow slumped 264.26 points, or 1.5 percent, to close at 16,945.80. The Nasdaq composite, which is dominated by technology companies, dropped 88.47 points, or 1.9 percent, to 4,466.75.
It was the worst day for all three indexes since July 31.
Two economic reports out Thursday were little help. Claims for unemployment benefits crept up last week. But the less volatile four-week average fell. A separate report said businesses’ orders for equipment plunged last month, mainly a result of falling orders for commercial aircraft.
“The economic numbers were negative, but not alarming and don’t change the direction of the economy at this time,” said Peter Cardillo, chief market economist at Rockwell Global Financial.
Henry Smith, chief investment officer at Haverford Trust, said there was no fundamental reason behind the drop Thursday. A sudden turn might seem alarming because it’s so unusual.
“We’ve really had such little volatility for the past couple of years,” Smith said. “Now, when we have a 200-point drop in the Dow, it feels like something is really wrong.”
Apple, which closed at a record high of $103.30 on Sept. 2, sank $3.88 to $97.87 in heavy trading.
It was the second-biggest drop in the S&P 500 index. In addition to the software glitch, some users of the new iPhone complained that the phone could be bent easily.