Wall Street slips as tech sector weighs

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks dipped on Tuesday as Apple and shares of its parts suppliers weakened on a report of soft iPhone X demand, which pulled technology shares lower.

Apple will slash its sales forecast for its flagship phone in the current quarter to 30 million units, down from what it said was an initial plan of 50 million units, Taiwan's Economic Daily reported, citing unidentified sources.

The report, along with some recent brokerage calls on tepid iPhone X demand, put Apple shares on pace for their worst single-day percentage fall since Aug. 10.

Shares of companies that supply parts to Apple, including Broadcom , Skyworks Solutions , Finisar and Lumentum Holdings , all moved lower. The PHLX semiconductor index <.SOX> lost 1.03 percent.

 

The S&P technology index <.SPLRCT> fell 0.76 percent, the worst performer among the 11 major S&P 500 sectors. The index has come under pressure in recent days and was on track for its fifth straight decline as market participants see tech names getting a smaller boost from the U.S. tax overhaul.

"The higher tax rate companies, basically get a profit break and the lower tax rate companies don't necessarily suddenly pay more in taxes, it is just on a relative basis, they are not in as advantageous a position as they used to be," said Jason Pride, director of investment strategy at Glenmede in Philadelphia.

A long-promised Republican bill to cut corporate tax rates to 21 percent from 35 percent was ratified last week.

The Dow Jones Industrial Average <.DJI> fell 35.59 points, or 0.14 percent, to 24,718.47, the S&P 500 <.SPX> lost 4.21 points, or 0.16 percent, to 2,679.13 and the Nasdaq Composite <.IXIC> dropped 24.58 points, or 0.35 percent, to 6,935.38.

Most markets around the world, including parts of Europe and Asia, were shut on Tuesday. Trading volumes are also expected to be light in the holiday week.

Losses were curbed by a boost in energy stocks as oil prices jumped more than 2 percent, helped by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts.

Chevron rose 0.8 percent and EOG Resources gained 1.9 percent to lead the S&P energy sector <.SPNY> 0.68 percent higher.

Shares of department store operators Kohl's , JC Penney and Macy's got a boost after a report that retail sales in the holiday period rose at their best pace since 2011. The S&P retail index <.SPXRT> advanced 0.49 percent.

Sucampo Pharma surged 6.2 percent after Mallinckrodt said it would acquire the drugmaker for $1.2 billion. Mallinckrodt shares rose 1.0 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favoured decliners.

The S&P 500 posted 39 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 79 new highs and 24 new lows.

(Reporting by Chuck Mikolajczak)