An unexpected drop in profits for Chinese tech giant Tencent has global stock indexes falling Wednesday as investors worry about demand for high-tech products as well economic growth.
Technology and energy companies are taking some of the worst losses in the U.S., while retailers are also falling after Macy’s said its sales slowed in the second quarter.
KEEPING SCORE: The S&P 500 index slid 18 points, or 0.6 percent, to 2,821 as of 3:30 p.m. Eastern time. The Dow Jones Industrial Average fell 116 points, or 0.5 percent, to 25,180. The Nasdaq composite dropped 90 points, or 1.2 percent, to 7,779.
The Russell 2000 index of smaller-company stocks sank 22 points, or 1.3 percent, to 1,669.
Stocks had rallied Tuesday to end a four-day losing streak. They took sharp losses Friday and Monday as investors watched Turkey’s deteriorating financial situation and rising conflict with the U.S.
TECH TROUBLE: Technology companies fell after Tencent, the most valuable tech company in China, said its profit declined 3 percent in the second quarter. Tencent is a gaming company and operates the popular WeChat social media platform.
Jefferies & Co. analyst Karen Chan said Tencent’s revenue was also disappointing, mostly because of weak results from its mobile gaming business.
Tencent stock fell 3.6 percent in Hong Kong. In the U.S, shares of online retailer JD.com fell 5.1 percent to $32.14 and web search company Baidu gave up 1.4 percent to $213.12.
Large U.S. tech stocks like Microsoft and Alphabet also slipped.
COMMODITIES: U.S. crude sagged 3 percent to $65.01 a barrel in New York and Brent crude, the standard for international oil prices, lost 2.3 percent to $70.76 a barrel in London.
Copper tumbled 4.5 percent to $2.56 a pound, its lowest price in more than a year.
Copper is considered an important economic indicator because of its uses in construction and power generation, and copper futures have fallen more than 20 percent since they hit an annual high of $3.30 a pound in early June.
THE QUOTE: Tencent’s profit stumble came a day after a series of disappointing economic reports from China, as growth in factory output, consumer spending and retail sales in July were all slower than expected. That’s been a pattern recently.
“This year we’ve seen slower growth. Everyone expected that,” said Kate Warne, an investment strategist for Edward Jones. “Over the last couple of months it looks like growth has been slower than everyone expected.”
OTHER TRADING: Gold lost 1.3 percent to $1,185 an ounce. Silver fell 4 percent to $14.45 an ounce.
Wholesale gasoline fell 1.8 percent to $2 a gallon and heating oil lost 1.8 percent to $2.09 a gallon. Natural gas dipped 0.6 percent to $2.94 per 1,000 cubic feet.
RETAIL ROUT: Department store Macy’s said its sales slowed in the second quarter. While Macy’s raised its projections for the year, its stock plunged 16 percent to $35.13 while Nordstrom dropped 6.1 percent to $51.53 and Kohl’s shed 6.3 percent to $73.93.
Those stocks have struggled for years as investors worried about the growing threat of Amazon and other online shopping options. Wednesday’s losses interrupted a huge rebound for the stocks in 2018.
TURKEY TURMOIL: Turkey’s currency stabilized and rose after authorities sought to ease liquidity problems in the banking system. Turkey also imposed $500 million in tariffs on U.S. goods as tensions between the countries increased.
There is also no sign that Turkey’s president will let the central bank raise interest rates, which economists say it should do urgently to support the currency.
The Turkish ISE National 100 index slumped 3.4 after a gain of 0.8 percent Tuesday. Indexes in other emerging markets including Brazil and Russia skidded as well.
BONDS: Bond prices rose. The yield on the 10-year Treasury note fell to 2.86 percent from 2.89 percent.
Banks fell because of a sharp drop in interest rates, which make mortgage and other loans less profitable. High-dividend companies like utilities and phone companies did better than the rest of the market. Investors often treat them as an alternative to bonds and buy them when yields fall.
JOINT VENTURE: Wine and beer maker Constellation Brands is ramping up its investment in cannabis company Canopy Growth by buying $4 billion in stock. Canopy shares soared 30.2 percent to $32.06 while Constellation Brands skidded 6 percent to $208.48.
UNDER THE HOOD: Tesla slipped again after Fox Business reported that the Securities and Exchange Commission subpoenaed documents from the electric car company as a previously-reported inquiry into the company intensifies.
CEO Elon Musk tweeted last week that he was considering taking the company private and had secured funding to do so. At least two lawsuits have been also filed over that tweet. The stock spiked after Musk’s message but has surrendered that gain. On Wednesday it fell 3 percent to $337.08.
OVERSEAS: Germany’s DAX fell 1.6 percent and the French CAC 40 lost 1.8 percent. In Britain, the FTSE 100 retreated 1.5 percent.
Japan’s Nikkei 225 index fell 0.7 percent and in Hong Kong, the Hang Seng dropped 1.6 percent. South Korea’s markets were closed for a holiday.
CURRENCIES: The dollar fell to 110.57 yen from 111.22 yen. The euro rose to $1.1346 from $1.1339.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay