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.
Besides nothing exciting or real value to any non Apple addict, what does the new I phone offer real users not addicts?
Also, Apple’s CEO is more interested in pushing the gay agenda and the anti Trump agenda than his business.
In the near future, surviving Business schools will document how many CEO’s including the owners of the NFL/Apple/? came close to destroying their companies with their liberal attacks against America and those who love America.
Many have started the destruction of their businesses with their vile attacks on those who live a positive lifestyle instead of a self destructive one!
Politics at its very core embodies the selective. i.e., once a political position is stated you have to account that you are now on the opposite side of 50% of all current, as well as potential customers. Sometimes the numbers can be higher.
But that’s the rule-of-thumb. That’s why it used to be the absolute last thing any CEO worth-their-salt would argue publicly, let alone place its business and customers directly into any political fray.
It would seem many of these CEO’s like Apple’s, forgot they were in the business of business – not the business of politics. Many have a sinking suspicion the price they are going to pay both in reputation, as well as share holder condemnation will be legend.
[ Dow tumbles more than 600 points As Democrats take control of the House. ]
Thank you.
“Is there such a thing as an index fund that includes only companies that do business strictly within the US!”
If you find one, please Freep Mail me and vice versa.
Just went back and checked - this has NOTHING to do with the trade war . Apple lost a lawsuit to Qualcomm in China and had all of their iPhones (except the X, Xs and Xr) pulled from the Chinese market!
https://bgr.com/2018/12/10/iphone-ban-china-apple-vs-qualcomm/
“The tech companies will *make* recent tech obsolete if they require any sort of software upgrades. ”
I had an old IPad (2011) that worked fine for what I used it for, and Apple refused to update the OS. When the apps started not to work on the old OS, I had to get a new one.
Gee, that’s too bad about Apple stock tanking.
Tim Cook caused this to happen, by LYING about how many iPhone XR’s were really sold in China and elsewhere..the iPhone XR did not sell well, not as many people upgraded to it. I was thinking about it but changed my mind, too expensive, read about numerous issues regarding freezing, etc so decided to hold off
Okay, sounds good.
I just spent a few minutes googling it (and binging it) and got nothing. There are tons of funds designed to get more exposure to international markets but I haven’t found one that’s designed to do the opposite. Maybe they’re deeper down in the results, or maybe I just need more precise search terms. If I find something I’ll let you know.
I predict the market will rise and fall and rise and fall over a period of time.
Hi.
If you get out and about, almost everywhere you go you see construction (of all kinds), trucks crowding the roads, corporate earnings, low unemployment, etc. No economic downturn in the near future no matter how much they want it to happen.
Just look around.
5.56mm
Thanks.
Might be a heck of a great new fund!
> Time to buy. <
I’m not very savvy about all this...but I’m waiting for the S&P 500 to drop to something close to its historical average p/e ratio. Of course this might mean that I’ll be waiting forever.
According to: http://www.multpl.com/
today’s p/e: 18.76
historical average p/e: 15.73
Tech saturation won’t happen as long as there is room to further bloat the bloatware.
We will soon consider dozens of megabytes for an app to be tiny as the bells and whistles keep proliferating like rabbits. The old cellphones will be as though they were old landline phones as data capacities grow to terabytes.
Is line of sight getting shorter, or are earnings accelerating significantly more too?
Markets saluted the incoming Rat Congress, just like 2007.
Here’s a possible clue about why a fund like this is hard to find:
“On a fund level, McKnight said, you will not be able to determine what the overall international exposure is. Currently there are no metrics to measure this. However, she said, you can gain a good sense for overseas exposure by looking at the fund’s capitalization.”
http://nj1015.com/do-your-us-mutual-funds-have-too-much-overseas-exposure/
Her point about capitalization makes sense. The bigger US companies tend to be multinationals whose sales might be 50 or 60 percent from foreign markets. That’s less the case for mid and small companies. So if it turns out there’s no explicitly “nationalist” fund, maybe it’s still possible to get in the ballpark with a mid and small cap fund.
And of course the key here isn’t just wanting stocks in US companies but in US companies that make their money in the US and have primarily US suppliers etc, so that they are less exposed to international markets both directly AND indirectly.
Right on. I think the market is reacting to the Democrats taking the house and promising to destroy the Trump Presidency.
“I predict the market will rise and fall and rise and fall over a period of time.”
I think you’re onto something.
Apple stopped reporting product sales volumes on their new phones and watches because they have too many variations and too many different markets for the numbers to be meaningful.
However, I do think the recent judgement in favor of Qualcomm hurt their product sales in China.
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