Posted on 01/03/2019 2:38:21 PM PST by Red Badger
U.S. stocks fell sharply on Thursday following a dire quarterly warning from Apple. The iPhone maker blamed a slowing Chinese economy for the shortfall, intensifying fears that the global economy may be slowing down because of the ongoing trade war.
A weaker-than-expected reading on U.S. manufacturing added to those fears.
The Dow Jones Industrial Average dropped 660.02 points, or 2.8 percent, to 22,686.22 as Apple shares led the decline. The 30-stock index tumbled to its low of the day right before the close, trading down as much as 707.83 points.
The S&P 500 pulled back 2.47 percent to 2,447.89 as the tech sector fell 5.07 percent. The Nasdaq Composite tumbled 3 percent to 6,463.50, snapping a five-day winning streak, as Apple’s stock dropped nearly 10 percent. Thursday marked Apple’s worst session since 2013.
Apple said it sees first-quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet. Apple blamed most of the revenue shortfall for struggling business in China.
“This piles on to existing anxiety of a slowdown in global growth,” said Jeff Kilburg, CEO of KKM Financial. “Apple can be used as a proxy to China’s growth.”
Chip stocks Advanced Micro Devices, Nvidia, Skyworks and Qorvo all dropped on the Apple warning. Skyworks lost more than 10 percent. Semiconductors fell broadly with the VanEck Vectors Semiconductor ETF (SMH) dropping 6 percent.
“While it’s likely a combination of both macro and micro, the contribution of the former means that maneuvering through the upcoming earnings season will be like swimming in shark infested waters,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, about what prompted Apple’s guidance cut. “That said, I’d argue it’s more of the latter.”
Apple’s warning also dragged down other companies that do big business in China. Caterpillar shares were down 3.9 percent. Boeing shares dropped 4 percent.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple CEO Tim Cook wrote in a letter to investors on the warning. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”
China and the U.S. are currently trying to strike a deal on trade after slapping tariffs on billions of dollars worth of each other’s goods. President Donald Trump said on Wednesday that last month’s losses — which market the worst December decline since 1931 — were a “glitch, ” adding equities will rebound once trade matters are squared up.
Thursday’s decline in equities was accelerated by a weaker-than-expected reading on the U.S. manufacturing sector. ISM’s manufacturing index fell to 54.1 in December, economists polled by Refinitiv expected 57.9.
“We turned the calendar but we didn’t turn the trend in the markets,” said Eric Wiegand, senior portfolio manager at U.S. Bank Private Wealth Management. “We have continued to witness a deceleration in global growth. As we started this year, the purchasing manufacturers’ index data from around the world indicated perhaps a pace of softening that caught investors by surprise. That’s reinforced by today’s release of the ISM manufacturing numbers.”
Shares of Delta Air Lines fell nearly 9 percent after the company issued slightly lower revenue guidance for the fourth quarter. Delta’s downturn dragged American Airlines and United Continental, as they pulled back 7.5 percent and 5 percent, respectively.
—CNBC’s Eustance Huang contributed to this report.
Looks like the bear market rally is over.
The Fed is pulling billions out of the market.
When they stop the market will return to normal.
Everything else is fake news.
Wall Street is not Main Street....
The Stock Market is not The Economy, and vice versa................
Gotta ask. Have we hit tech saturation yet? Pretty soon the next big Apple thing gets tiring.
Old school here. If it ain’t broke yada yada yada
Gotta ask. Have we hit tech saturation yet? Pretty soon the next big Apple thing gets tiring.
Old school here. If it ain’t broke yada yada yada
You can make money on the ups and downs.
Drug dealer is safer.................
Is there such a thing as an index fund that includes only companies that do business strictly within the US — i.e. that are less dependent on foreign sales and foreign markets?
Smartphone market saturation has been nearing for a while.
Apple supposedly didn’t unveil a new toy they had promised for 2018.
Even China’s market has gotten slow...............
Don’t know...................
The rats have come to town
I bought my annual hand full of 1 ounce gold eagles in December. Nice bump so far. Oh yeah, screw Apple and Tim Cook.
The Bottom Feeders will come back in.................
The tech companies will *make* recent tech obsolete if they require any sort of software upgrades. They will either require massive upgrades in processor and/or memory, or they just won't support the products at all (i.e. MS killing Win7 a year from now).
We just have to see what the next big thing is...
-Self-driving cars need a lot of tech.
-Virtual Reality gear is going to be huge.
-Wearable tech.
-More and more 3D printing. Home versions to become common.
-Better batteries and/or super-capacitors.
-Electric cars with battery packs that can be swapped out for a charged one.
Fixed it for you.
This all to be expected! Once Pelosi gained the majority and most idiot-minded Americans voted for socialism, this was bound to happen. I was told to get out of the market the moment the Demonrats won the majority. They don’t want a strong America they want dumbed down brainwashed people to lead us to a Venezuala economy!
Time to buy.
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