All the major indexes fell more than 1% in trading on Tuesday, and the blue-chip Dow lost as many as 250 points. Crude oil cratered to a six-year low.
First, the scoreboard:
- Dow: 17,401.14, -214.03, (-1.22%)
- S&P 500: 2,082.42, -21.76, (-1.03%)
- Nasdaq: 5,030.72, -71.08, (-1.39%)
And now, the top stories on Tuesday:
- China’s central bank devalued the yuan by 2%. The People’s Bank of China set the midpoint of the currency at 6.2298 against the US dollar — a move that sent the USD/CNY currency pair to the highest level in almost three years. Authorities have intervened to bolster a slowing economy and make exports more competitive. Exports fell 8.9% year-over-year in July.
- Major commodity currencies got slammed. The kiwi and Aussie dollar each extended losses and fell more than 1%. The Canadian dollar climbed to as high as $US1.3150 versus the USD.
- Crude oil collapsed to a six-year low. West Texas Intermediate crude oil futures fell by up to 5% to as low as $US42.70. The 12-member oil group OPEC reported, citing secondary sources, that its output climbed to a three-year high last month. OPEC has overshot its production target for at least a year to maintain market share.
- Analysts love Alphabet. Google shares rallied 5% after the company announced a major re-organisation Monday evening: Alphabet will become the parent company of Google and will manage current ‘non-core’ products like Google Ventures. Google will consist of ‘core’ products like YouTube and Android. Most of the sell-side notes we thumbed through maintained a bullish outlook on the stock. Analysts say the new structure will bring greater transparency to the performance of Google’s core products.
- Apple shares tanked 5%. The stock is down 14% since the company released earnings results that showed disappointing iPhone sales July 21. There were a few downbeat notes published today. Jeffries lowered its price target to $US130 from $US135 due to Apple’s exposure to China, amid the currency devaluation. UBS research showed that there’s “lacklustre interest as measured by global [internet] search activity” for Apple Watch. And, KGI Securities, known for making accurate product predictions, forecasted zero or negative iPhone sales growth in the fourth quarter.