Dollar hits 16-month high; tech woes crunch stocks

By Lewis Krauskopf

Major U.S. stock indexes dropped more than 1 percent, with the tech-heavy Nasdaq slumping over 2 percent. Indexes were weighed down by a 4.3-percent slump in index heavyweight Apple , after an iPhone parts supplier cut its outlook.

In Europe, fears about a no-deal Brexit and a growing rift over Italy's budget put pressure on the euro and the pound. The dollar also gained strength as investors built bets on a U.S. Federal Reserve interest rate increase next month.

"Rising global uncertainty and a widening U.S. yield differential with other economies provide support, but an elevated valuation may constrain further gains," Richard Turnill, global chief investment strategist with BlackRock, wrote in a research note.

The dollar index <.DXY> rose 0.62 percent, with the euro down 0.8 percent to $1.1243.

The Dow Jones Industrial Average <.DJI> fell 493.57 points, or 1.9 percent, to 25,495.73, the S&P 500 <.SPX> lost 44.93 points, or 1.62 percent, to 2,736.08 and the Nasdaq Composite <.IXIC> dropped 183.14 points, or 2.47 percent, to 7,223.76.

Apple shares fell as the main supplier for its Face-ID technology, Lumentum Holdings Inc , slashed revenue and profit forecasts, citing reduced orders from a major customer. Lumentum shares tumbled 29.4 percent and shares of other Apple suppliers also dropped.

The S&P 500 technology sector <.SPLRCT>, a main driver of the long U.S. bull run in stocks, sank 3.1 percent. Defensive groups utilities <.SPLRCU> and real estate <.SPLRCR> were the lone sectors in positive territory.

"Some of the defensive areas and defensive stocks seem to be picking up a bid at the expense of that continued rotation out of some of the more growth-oriented sectors," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

European shares were lower led by a sell-off in technology stocks after earnings and M&A news from German heavyweights Infineon and SAP .

The pan-European STOXX 600 index <.STOXX> lost 1.01 percent.

MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 1.40 percent, on pace for its third straight session of declines.

Oil prices rose, breaking a stretch of losses, after Saudi Arabia said OPEC and its partners believed demand was softening enough to warrant an output cut of 1 million barrels per day next year.

U.S. crude rose 0.28 percent to $60.36 per barrel and Brent was last at $70.78, up 0.85 percent on the day.

(Additional reporting by Richard Leong in New York and Sujata Rao in London; Editing by Toby Chopra and Nick Zieminski)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)