S&P and Nasdaq Experience Declines Due to Apple's Drag and Jobless Claims Data Raising Rate Concerns

S&P 500 and Nasdaq Dip as Apple Weighs Down, Jobless Claims Data Raises Rate Concerns

On Thursday, the S&P 500 and Nasdaq experienced declines, primarily due to Apple's performance and concerns about China's restrictions on iPhones, while weekly U.S. jobless claims data added to worries about interest rates and persistent inflation.

Apple Inc (AAPL.O), a heavyweight in the S&P, saw its shares fall by 2.9% for the second consecutive day. This drop was attributed to news that China had expanded its restrictions on iPhone usage by state employees, requiring some central government agencies' staff to refrain from using their mobile phones during work hours.

According to reports from Bloomberg, China planned to extend the iPhone ban to state-owned firms and agencies.

The impact of Apple's decline, along with the negative effects on its suppliers and companies with significant exposure to China, led to a 1.6% decrease in the S&P 500 technology sector (.SPLRCT), making it the sector with the largest percentage decline among the benchmark's 11 major sectors.

A report from the U.S. Labor Department indicated that the number of Americans filing for unemployment claims dropped to 216,000 for the week ending September 2, marking the lowest level since February. However, investors were concerned that this positive news might lead the Federal Reserve to maintain its tight monetary policy, putting pressure on stocks.

Sahak Manuelian, managing director and head of equity trading at Wedbush Securities, commented on the impact of Apple's news and the weekly claims data, saying, "The weekly claims were big news this morning, good news being construed as bad news, and it's hard to ignore the news out of China."

Investors were also awaiting inflation data for August, which is due in a week. Manuelian noted that rising oil prices could contribute to concerns about inflation.

While the likelihood of the Fed leaving interest rates unchanged in September stood at 93%, the chances of another pause in the November meeting were lower at 53.5%, according to the CME Group's FedWatch Tool.

Craig Fehr, head of investment strategy at Edward Jones, described the day's decline as a "cautious defensive stance" and emphasized the challenge for the Fed in achieving the right balance in monetary policy.

New York Fed President John Williams mentioned that it was an "open question" whether monetary policy was sufficiently restrictive to bring the economy back into balance. He emphasized the need to remain data-dependent.

The Dow Jones Industrial Average (.DJI) gained 57.54 points, or 0.17%, to reach 34,500.73. The S&P 500 (.SPX) lost 14.34 points, or 0.32%, closing at 4,451.14, and the Nasdaq Composite (.IXIC) declined by 123.64 points, or 0.89%, to finish at 13,748.83.

The Dow outperformed the S&P and Nasdaq, largely because Apple has a lower weighting in the Dow, which is price-weighted, while Apple is one of the largest weights in the market capitalization-weighted S&P 500 (.SPX).

The defensive utilities sector (.SPLRCU) was the biggest gainer among S&P sectors, rising by 1.3%, signaling a risk-off sentiment in the market.

The Philadelphia semiconductor index (.SOX) fell by 1.98%, and shares of Apple suppliers, including Skyworks Solutions (SWKS.O), Qualcomm (QCOM.O), and Qorvo (QRVO.O), all experienced declines of more than 7%.

Concerns about the U.S.-China relationship resurfaced due to the news from China, potentially posing a significant risk to technology equities.

Data showing a decline in China's exports and imports in August further dampened sentiment about the world's second-largest economy.

Shares of U.S.-listed Chinese companies, such as PDD Holdings (PDD.O), JD.com, Alibaba, and Baidu, all saw declines ranging from 3.4% to over 4%.

On a positive note, McDonald's (MCD.N) shares rose by 1% after Wells Fargo upgraded the stock to "overweight."

Automation software firm UiPath (PATH.N) rallied by 11.5% following an optimistic annual revenue forecast.

Declining issues outnumbered advancing ones on the NYSE, with a ratio of 1.80-to-1, while on Nasdaq, decliners were favored with a ratio of 2.03-to-1.

The S&P 500 registered 13 new 52-week highs and 26 new lows, while the Nasdaq Composite recorded 22 new highs and 268 new lows.

Trading volume on U.S. exchanges reached 9.76 billion shares, slightly below the 10.10 billion moving average for the last 20 sessions.