Led by the Dow Jones, U.S. stocks plunged anew on Thursday, as Apple’s grim revenue guidance exerted a gravitational pull on the broader market. Apple CEO Tim Cook issued a warning Wednesday that the iPhone maker will badly miss its revenue forecast for the first time in over 15 years.
The Dow Jones Industrial Average fell as much as 678 points through the early morning session. It was last down 606 points, or 2.6%, at 22,739.44 where it was on track for the lowest settlement since Christmas Eve.
The broad S&P 500 Index was tracking a loss of 1.8% at 2,466.61. Ten of 11 primary sectors were trading lower, led by a 4% drop in information technology.
Plunging tech shares weighed heavily on the Nasdaq Composite Index, which is currently down 2% at 6,534.19.
Declines after the bell follow a volatile pre-market session that saw Dow futures fall more than 300 points. The CBOE VIX, which tracks the market’s expected volatility over the next 30 days, rose 11% to 25.78. VIX trades on a scale of 1-100 with 20 representing the historic average. A higher VIX typically corresponds with declining stock prices.
Shares of Apple Inc. (AAPL) are down more than 9% in New York trading after the company announced it will miss its revenue forecast for the critical holiday quarter. In a carefully crafted letter, CEO Tim Cook said economic turmoil in China wreaked havoc on the company’s top line.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall,” Cook said in his letter.
Apple’s share of China’s smartphone market has dwindled over the past three years and is expected to fall further as demand for expensive iPhones continues to erode. Last month, the Chinese government reported the lowest retail sales growth in 15 years, casting doubts about Beijing’s ability to reorient its economy away from trade and exports.
This reality was reflected in Cook’s letter:
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.
Since becoming Wall Street’s first trillion-dollar company back in August, Apple’s market cap has fallen by more than $300 billion. The company is currently valued at around $680 billion.
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