By CCN.com: The Dow and broader U.S. stock market finished sharply lower on Tuesday, as the threat of a trade-war escalation with China prompted Citigroup to slash its iPhone sales projections by half. Shares of Apple Inc. (AAPL) were little changed at the start of the holiday-shortened week, but that could soon change if Chinese residents shift their smartphone preferences.
All of Wall Street’s major indexes pivoted lower Tuesday afternoon, which reflected a tepid pre-market for Dow futures. The Dow Jones Industrial Average initially rose by as much as 132 points before giving back gains later in the session. It would settle down 237.92 points, or 0.9% at 25,347.77.
The broad S&P 500 Index of large-cap stocks declined 0.8% to 2,802.39. Ten of 11 primary sectors reported declines, with consumer staples falling 1.7%.
The technology-focused Nasdaq Composite Index pivoted lower in the final hours of trading, falling 0.4% to 7,607.35.
The ongoing trade war between the United States and China could have adverse effects on Apple. Analysts at Citigroup believe iPhone sales “could be cut in half” should Chinese consumers shift their purchasing preference to domestic brands.
“We are proactively slashing our iPhone unit sales as we believe the US/China trade situation will result in a slowdown of Apple iPhone demand in China as China residents shift their purchasing preference to China national brands,” Citi said, according to CNN.
Apple ranks as the sixth most heavily-weighted component in the Dow 30. It is also represented on the S&P 500 Index, and – further still – it trades on the Nasdaq. If Citigroup’s estimates are proven accurate, the technology sector as a whole could suffer significant losses as a result of the trade war.
Tech stocks in general and semiconductor companies, in particular, have the most to lose from a trade war. The Chinese territory of Taiwan is one of the most active regions for the semiconductor industry.
On Monday, President Trump said his administration isn’t ready to make a new deal with China, highlighting the fractious state of the current negotiations.
“I think they probably wish they made the deal that they had on the table before they tried to renegotiate it,” Trump said Monday at a joint press conference with Japanese Prime Minister Shinzo Abe in Tokyo.
Apple admitted last year that it might have a China problem after the company downgraded its outlook on iPhone sales in the country. In its most recent quarter, Apple reported $58.02 billion in revenue, including $10.22 billion for Greater China.
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Last modified: July 2, 2020 8:09 PM UTC