US stocks drop; big banks hit by tougher capital rules

Wall Street stocks fell Tuesday, pulled down by major banks after the Federal Reserve signaled more stringent capital requirements. AP

NEW YORK–Wall Street stocks fell Tuesday, pulled down by major banks after the Federal Reserve signaled more stringent capital requirements.

Underwhelmed Apple investors, meanwhile, sent its shares lower after its much-awaited product launch, adding to a broader tech sector selloff.

The Dow Jones Industrial Average lost 97.55 points (0.57 percent) at 17,013.87.

The broad-based S&P 500 dropped 13.10 (0.65 percent) to 1,988.44, while the tech-rich Nasdaq Composite Index fell 40.00 (0.87 percent) to 4,552.29.

Dow members JPMorgan Chase and Goldman Sachs fell by 1.4 percent and 1.5 percent, respectively, and Morgan Stanley sank 2.7 percent after a top US Fed official said the largest banks with high dependence on short-term funding would have tougher capital rules, to ensure they do not place the financial system at risk.

The market was lower in early trade and the losses accelerated in the afternoon after Apple, the largest US company by market capitalization, unveiled new iPhones, a mobile-payment system and a smartwatch.

Jack Ablin, chief investment officer at BMO Private Bank, said investors appeared to be disappointed; Apple’s shares ended down 0.4 percent.

“Investors have come to expect game-changers from this company and anything short of that is a disappointment,” he said.

Dow member Home Depot fell 2.1 percent after confirming that its payment data systems had been breached, potentially affecting customers using charge cards in the US and Canada.

McDonald’s, another Dow member, dropped 1.5 percent as it reported that August global comparable sales fell 3.7 percent due in part to 14.5 percent decline in its Asia/Pacific, Middle East and Africa division following a food safety scandal in China.

Online retail giant Amazon sank 3.7 percent after it slashed the price of its Fire smartphone from $199 to 99 cents with a two-year contract. Analysts saw the price cut as a sign the phone is selling poorly.

Food company General Mills declined 0.6 percent after announcing that it would acquire organic foods company Annie’s in a deal valued at $820 million. General Mills said the purchase would enhance its position in an increasingly popular business segment.

Shares of Annie’s surged 37.6 percent.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.50 percent from 2.47 percent Monday, while the 30-year increased to 3.23 percent from 3.22 percent. Bond prices and yields move inversely.