Markets have worst week since March in wake of tech rout

Stocks around the world are tumbling on worries the worsening pandemic will mean more restrictions on businesses

Traders on the floor of the New York Stock Exchange. Stocks around the world are tumbling on worries the worsening pandemic will mean more restrictions on businesses and drag down the economy. AP

US stocks dropped, capping their biggest weekly rout since March, after earnings from the largest tech companies disappointed investors concerned that a slowing economy will damp profit.

The Nasdaq 100 declined about 2.6 per cent after Apple's iPhone sales and Twitter's user growth both missed estimates, though Google parent Alphabet jumped after reporting a rebound in advertising. The S&P 500 Index dropped 5.6 per cent over the past five days, the worst-ever loss in the week leading to a presidential election. Ten-year Treasury yields jumped to the highest since June.

Twitter posted its worst day since 2014 after the company's third-quarter results showed fewer new users than analysts had projected. Shares of the social media company plunged 21 per cent after saying it added just a million new daily users in the third quarter, 8 million fewer than analysts estimated, despite the return of live sports and a US election campaign that were expected to drive people to the platform. Friday's drop erased $8.8 billion (Dh32bn) in market value. However, the stock is still up 88 per cent since its recent low on March 18.

Since becoming the first American company to surpass $2 trillion in market value in August and peaking last month, Apple has lost $450bn, wiped out by a 19 per cent slump. The latest bout of selling — a 5.6 per cent drop on Friday — took out more than $120bn alone. Apple is now worth $1.85tn and still the most valuable US company, but the amount shaved from its ledger since its September peak is more than the entire market cap of Visa, the seventh largest member of the S&P 500, and greater than the value of Thailand’s stock exchange.

The tech slump, coming after an unprecedented run higher this year, is adding to volatility that’s likely to remain elevated heading into next week’s US election. Global equities posted the worst weekly decline since March as lockdown measures in some countries and the lack of an agreement on US stimulus dented sentiment. New US coronavirus cases topped 89,000, setting a daily record.

“Today’s action is a reminder of just how fickle markets can be,” said Yousef Abbasi, global market strategist at StoneX. “The earnings themselves were not awful, but the market has priced tech to near perfection and thus one fly — maybe even a fruit fly — in the ointment could perpetuate a sell-off.”

In Europe, equities edged higher. Tech stocks also faltered as did Danish drug giant Novo Nordisk, whose earnings disappointed analysts. Banks rose after Spain’s BBVA and the UK’s NatWest Group reported improved pictures for soured loans.