The Dow dives 660 points as Apple letter adds to China growth fears

Romina Amato/Red Bull via Getty Images

Stocks fell Thursday after a warning from Apple fanned fears about the prospect of slowing economic growth around the world, adding to jitters about political turmoil in Washington and rising rates.

The Dow Jones Industrial Average shed 660 points, or 2.83%. The S&P 500 fell 2.48%, meanwhile, and the Nasdaq Composite lost 3.04%. Stocks have suffered several weeks of dramatic swings, recording their worst year since 2008 on Monday.

Apple chief executive Tim Cook partly blamed weak iPhone sales in China in a letter lowering Apple’s revenue forecast Wednesday, the same day data showed private-manufacturing activity in the second largest economy contracted for the first time in 19 months. Shares of the company plunged more than 9% following the announcement.

Cook also said the technology giant hadn’t anticipated the degree of deceleration taking place there, underscoring expectations for major economies to lose steam in coming months. Bellwether industrial companies also fell Thursday, with Boeing, Caterpillar and 3M shedding as much as 4%.

“This adds fuel to the fire of concerns about slowing global growth and/or a trade war, and compounds this week’s China PMI Manufacturing misses,” Accendo Markets analysts Mike van Dulken and Artjom Hatsaturjants said in an email. “After Tesla announced price cuts, that’s two New Year kicks for the Tech sector which has resumed its October and December sell-off.”

On Wednesday, Tesla said it delivered fewer Model 3 vehicles than expected in the fourth quarter and lowered prices on its models by $US2,000 to help offset federal tax credits that were cut in half this week.

Also keeping investors on edge, the federal government in its second full week of a partial shutdown. House Democrats taking control of the chamber plan to pass a proposal to reopen the government Thursday as the 116th Congress convenes, but it could face opposition in the Senate or from President Donald Trump.

“The shutdown increases uncertainty and adds to the laundry lists of risks affecting both the global and domestic economy including: Fed policy, Brexit, US-China trade relations and others,” Bank of America Merrill Lynch economists said in a research note Thursday.

On the commodities front, oil prices climbed more than 2%, with West Texas Intermediate trading just under $US47 per barrel and Brent around $US55.60. Prices have shed more than a third from October highs as as traders fret over the possibility of oversupply and expectations for dampened demand.

The dollar and Treasury yields edged lower after ADP said US firms added the most workers to payrolls in nearly two years in December. The Labour Department is set to release its jobs report Friday.

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