Stocks fall after iPhone sales slip

Associated Press

NEW YORK

Stocks tumbled Thursday on Wall Street, with technology companies suffering their worst loss in seven years, after Apple reported that iPhone sales are slipping in China.

The rare warning of disappointing results from Apple stoked investors’ fears that the world’s second-biggest economy is losing steam and that trade tensions between Washington and Beijing are making things worse. The sell-off also came after a surprisingly weak report on U.S. manufacturing.

The Dow Jones Industrial Average plunged 660 points, or 2.8 percent, and the broader S&P 500 index fell 2.5 percent.

Apple stock plummeted 10 percent, wiping out more than $74 billion of the company’s market value. That’s almost as much as Starbucks is worth and more than Lockheed Martin, Lowe’s, Caterpillar, General Electric or Morgan Stanley.

Other major exporters, including heavy-machinery manufacturers and tech companies such as Intel and Microsoft, also took big losses.

“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.”

Over the past year, the U.S. and China slapped new tariffs on hundreds of billions of dollars’ worth of imports in a trade war that threatens to snarl multinational companies’ supply lines and reduce demand for their products. Companies such as General Motors, Caterpillar and Daimler have all said recently that trade tensions and slower growth in China are damaging their businesses.

“When the largest and second-largest economies in the world get into a trade dispute, the rest of the world’s going to feel the effects. That’s what we’re seeing now,” said Jack Ablin, chief investment officer of Cresset Wealth Advisors.

In a letter to shareholders Wednesday, Apple CEO Tim Cook said that iPhone demand is waning in China and that the company expects revenue of $84 billion for the quarter that just ended. That’s $7 billion less than analysts expected.