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Markets follow Apple in plunge

 
TOKYO, JAPAN - SEPTEMBER 19: A customer looks at the new Iphone 6 Plus at the launch of the new Apple iPhone 6 and iPhone 6 plus at the Apple Omotesando store on September 19, 2014 in Tokyo, Japan. On September 19, Apple's new products, iPhone 6 and iPhone 6 Plus, with iOS 8 featuring 4.7-inch and 5.5-inch displays, have become available in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the UK, and will be available in more than 20 additional countries beginning on September 26.  (Photo by Chris McGrath/Getty Images) 513578801
TOKYO, JAPAN - SEPTEMBER 19: A customer looks at the new Iphone 6 Plus at the launch of the new Apple iPhone 6 and iPhone 6 plus at the Apple Omotesando store on September 19, 2014 in Tokyo, Japan. On September 19, Apple's new products, iPhone 6 and iPhone 6 Plus, with iOS 8 featuring 4.7-inch and 5.5-inch displays, have become available in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the UK, and will be available in more than 20 additional countries beginning on September 26. (Photo by Chris McGrath/Getty Images) 513578801
Published Sept. 26, 2014

NEW YORK — A stumble by Apple set off the worst rout in the stock market since July on Thursday.

The selling started early and picked up strength in the afternoon. By the close of trading, all 30 companies in the Dow Jones Industrial Average and the 10 industries in the Standard & Poor's 500 index lost ground.

Most investors said the drop wasn't a sign of worry, as all the forces behind the market's long rally remain in place. It was only a week ago that the S&P 500 touched a record high, and strong runs are usually followed by short breaks. The index has lost 2 percent this week but is still up 6 percent for the year.

"There's just an absence of real news to chew on," said Mark Luschini, the chief investment strategist at Janney Montgomery Scott. "When you're at a peak, markets need more and more good news to keep climbing."

The S&P 500 index lost 32.31 points, or 1.6 percent, to close at 1,965.99. The Dow slumped 264.26 points, or 1.5 percent, to close at 16,945.80. The Nasdaq composite, which is dominated by technology companies, dropped 88.47 points, or 1.9 percent, to 4,466.75. Apple led the drop on the Nasdaq, losing $3.88 to close at $97.87 in heavy trading.

It was the worst day for all three indexes since July 31.

Two economic reports out Thursday were little help. Claims for unemployment benefits crept up last week, though the less volatile four-week average fell. A separate report said businesses' orders for equipment plunged last month, mainly a result of falling orders for commercial aircraft.

"The economic numbers were negative but not alarming, and don't change the direction of the economy at this time," said Peter Cardillo, chief market economist at Rockwell Global Financial.

Trading this week has turned increasingly turbulent, an abrupt break from a sleepy summer. On Monday, concerns about slowing growth in China and falling U.S. home sales knocked the market back, giving the S&P 500 its worst daily drop in more than a month. On Wednesday, the S&P 500 had its best gain in more than a month.

Some investment professionals have been warning that the market has been calm for too long and say a 10 percent drop, known as a "correction," is overdue. Since World War II, they typically hit every 18 months, according to S&P Capital IQ. The last one occurred in August 2011.

"Big pullbacks are normal in a bull market," Smith said. "What's abnormal is that we've gone three years without one."

Bill Strazzullo, chief market strategist at the research firm Bell Curve Trading, thinks stocks could fall further as the S&P 500 slips toward 1,950. He said the money that investors poured into stocks when the index crossed above that mark could be pulled out.