Apple warning of weak sales in China sends US stocks sinking

NEW YORK (AP) — Apple's warning its sales in China weakened over the holidays added to investors' fears the global economy is losing strength, with the trade fight between the U.S. and China making the situation worse. U.S. stock indexes fell sharply this morning.

Apple's stock plunged 8.9 percent and other big exporters including technology and machinery companies also took big losses. Some of the worst drops went to chipmakers that make components used in smartphones and other gadgets. The trade dispute, nearly a year old, threatens to snarl their supply lines and reduce demand for their products. Tariffs and other trade sanctions could add to their difficulties.

The Dow Jones Industrial Average fell 373 points, or 1.6 percent.

In a letter to shareholders on Wednesday, Apple CEO Tim Cook said iPhone demand was waning in China and would hurt revenue for the October-December quarter. Cook said Apple expects revenue of $84 billion for the quarter. That's $7 billion less than analysts expected, according to FactSet.

Apple's warning, its first since 2002, deepened concerns about the Chinese economy, which had been showing signs of stress.

The S&P 500 index dropped 33 points, or 1.3 percent, to 2,487 at 9:55 a.m. Eastern time. The Dow slid to 22,972. The Nasdaq composite, which has a high concentration of tech stocks, retreated 124 points, or 1.9 percent, to 6,541. The smaller and more U.S.-focused Russell 2000 dipped 17 points, or 1.3 percent, to 1,338.

"For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK," said Neil Wilson, chief markets analyst at Markets.com. "Therefore, Apple's rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific?"

Apple's warning couldn't have come at a worse time for stock market investors given the wipeout in late 2018, when many global indexes posted their worst performances in a decade amid concerns about the global economy and the prospect of further U.S. interest rate hikes.