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While you were sleeping: UPDATED Dow plummets as Icahn dumps Apple

Apple shares dropped 2.6%.

Margreet Dietz
Fri, 29 Apr 2016

Wall Street fell the most in a day since February as billionaire and activist investor Carl Icahn said he had sold his Apple stake.

Apple shares dropped 2.6% and pulled the Dow Jones Industrial Average down 210.79 points, or 1.2%, to 17,830.76.

"We no longer have a position in Apple," Mr Icahn told CNBC, noting Apple is a "great company" and CEO Tim Cook is "doing a great job."

Other leading technology stocks, Microosoft and IBM, each fell 2%.

The Nasdaq Composite Index also fell 1.2% to 4805.29 while the Standard & Poor's 500 Index finished 0.9% lower at 2075.81.

BoJ passes on more expansion
Also weighing on the market was the Bank of Japan's surprise decision not to expand its monetary stimulus.

A day after the US Federal Reserve signalled patience in its approach toward raising interest rates, a Labor Department report showed that US gross domestic product grew at a 0.5% annual rate in the first quarter.

"The economy essentially stalled in the first quarter but that doesn't mean it is faltering," Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, told Reuters. "Some of the restraints to growth are dissipating. Growth is likely to accelerate."

With a potential US interest rate increase pushed further out, the greenback weakened, which supported commodities denominated in the currency.

"While the central banks will continue to have an enormous impact on the market, the weaker [US] dollar and stronger crude oil prices will support gains in the market," Keith Lerner, chief market strategist at SunTrust Private Wealth Management, told Reuters.

US crude rose 1.5% to $US46.03 a barrel, while gold rose 1.3% at $US1265.50 an ounce. The yield on the 10-year note rose to 1.870% from 1.861% on Wednesday as prices fell.

Gold forecasts raised
Gold analysts polled by Reuters have raised their forecasts for the precious metal. The survey of 30 analysts at banks and trading houses carried out this month returned an average 2016 gold price forecast of $US1209 an ounce, up from $US1118 in a similar poll in January, according to Reuters.

"The chief supportive factors are the shift in Fed stance, the weaker dollar and the prospect of inflation," Macquarie analyst Matthew Turner told Reuters. "The first two have raised the base price, the third is why we expect higher medium-term prices."

There was solid earnings news. Shares of Facebook soared 8%, touching a record high earlier in the day, after the company posted better-than-expected earnings.

"Facebook remains in a class by itself across the combination of scale, growth, and profitability," JP Morgan Securities analyst Doug Anmuth said in a research note, according to Reuters. "While there are broader concerns of macro softness toward the end of the first quarter, Facebook isn't seeing them."

Ford Motor jumped 3.7% after reporting a surge in quarterly earnings.

Fresh deals added support. Shares of St Jude Medical jumped after Abbott Laboratories agreed to buy it in a deal valued at $US25 billion while DreamWorks Animation SKG soared after Comcast agreed to buy it for $US3.8 billion.

In Europe, the Stoxx 600 Index ended the day with a 0.2% advance from the previous close. The UK's FTSE 100 index crept 0.04% higher, while Germany's DAX index added 0.2%. France's CAC 40 index slipped 0.04%.

"The last thing I do really expect is a sustainable rally in stock prices," Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany, told Bloomberg. "Earnings look OK but as earnings estimates further down the road are still too high, there will be a negative trend in earnings revisions."


Margreet Dietz
Fri, 29 Apr 2016
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While you were sleeping: UPDATED Dow plummets as Icahn dumps Apple