Apple warning pummels markets worried about growth outlook
The U.S. stock markets retreated Thursday as China's slowing economy forced Apple to slash its revenue forecast, wiping around 75 billion U.S. dollars from the company's value and denting global investor sentiment.
Sentiment in the U.S. was further dented by Institute for Supply Management data showing the U.S. manufacturing activity at a two-year low. The data still showed growth but suggested the U.S. was seriously affected by a slowing global economy and trade tensions.
The rare revenue warning from Apple pointed to weaker-than-anticipated sales of iPhones and other gadgetry, in part because of trade frictions between Washington and Beijing.
Apple finished down 10 percent, ending with a market value of just under 675 billion U.S. dollars, far from the landmark 1.0 trillion U.S. dollars level it reached in August.
US stock indices were also hard hit, with the Dow ending at 22,686.22, down 660 points, or 2.8 percent.
Tech companies with steep falls included Intel, which slumped 5.5 percent, while shares in Franco-Italian group STMicroelectronics dived 9.7 percent and Germany's Infineon shed around five percent.
"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. Therefore, Apple's rare profits warning is a red flag for market watchers," noted Neil Wilson, chief market analyst at Markets.com.
"We're heading to the earning season," said Adam Sarhan of 50 Park Investments. "The fact that Apple, one of the largest companies in the world, lowers guidance basically means other companies are going to lower it as well."
White House economist Kevin Hassett said Apple was not alone, telling CNN there were "a heck of a lot of US companies" exposed to the Chinese market that were likely to see earnings downgraded until Washington and Beijing resolved their differences on trade.