By Yasin Ebrahim
Investing.com -- The Dow slumped Thursday, moving deeper into correction territory as a slump in Apple triggered a rout at a time when many fear ongoing Federal Reserve rate hikes will derail the economy.
The Dow Jones Industrial Average slipped 1.5%, or 458 points, the Nasdaq was down 2.8%, and the S&P 500 fell 2.1%.
Apple (NASDAQ:AAPL) fell 5% after Bank of America downgraded the company to Neutral from Buy, citing worries about a slowdown in consumer spending.
The tech giant is expected to face “material negative estimate revisions,” over the next year, Bank of America said, pointing to a slowdown in “services and relatively lackluster iPhone lead times” as signs that consumer demand will slow.
The downgrade soured sentiment on semiconductor stocks, with Apple chip suppliers including Taiwan Semiconductor Manufacturing (NYSE:TSM), Qualcomm Incorporated (NASDAQ:QCOM), and Analog Devices Inc (NASDAQ:ADI) adding to recent losses. NVIDIA's (NASDAQ:NVDA) 4% slump, meanwhile, also weighed on chip stocks.
Rising Treasury yields, the enemy of growth sectors like tech stocks, also added pressure on the broader market as an upside revision to second-quarter inflation suggested the Federal Reserve will have to persist with rate hikes.
The personal consumption expenditure price index, the fed’s preferred inflation gauge, was revised higher to a 7.3%. While the core PCE price measure, which excludes food and energy, and is closely watched was upwardly revised to 4.7% from 4.4%.
The data comes ahead of fresh inflation figures due Friday expected to show 0.5% in the PCE price index for August.
The latest weekly jobless claims data, meanwhile, also suggested the Fed has more work to do as claims in the week ending Sept. 24, unexpectedly fell 16,000 to 193,000.
Cleveland Fed President Loretta J. Mester said that inflation was 'unacceptably high,' and reiterated the Fed’s willingness to bring inflation back toward the 2% target even if the economy slows.
Consumer stocks, meanwhile, fell more than 3% after a 24% plunge in CarMax Inc (NYSE:KMX) after the autodealer reported quarterly earnings that fell short of analysts’ estimates.
Bed Bath & Beyond (NASDAQ:BBBY) fell 4% after reporting a wide-than-expected loss, paced by a decline in Buybuy Baby, its baby merchandise chain.
In other news, Peloton Interactive (NASDAQ:PTON) fell 14% after detailing plans to sell its equipment at Dick’s Sporting Goods, a move that points to further signs of slowing demand for its fitness equipment.