Dow falls 660 after iPhone sales decline
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 like 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.
Cook’s comments echoed the concerns that have pushed investors to flee stocks over the past three months. The U.S. stock market in 2018 posted its worst year in a decade.
The S&P 500 lost 62.14 points Thursday, closing at 2,447.89. The Dow fell to 22,868.22. The Nasdaq, which has a high concentration of tech stocks, retreated 202.43 points, or 3 percent, to 6,463.50.
U.S. government bond prices surged, sending yields to their lowest level in almost a year, and gold and high-dividend stocks like utilities also rose as investors looked for safer places to put their money.
The Institute for Supply Management said its index of U.S. manufacturing fell to its lowest level in two years, and new orders have fallen sharply since November. Manufacturing is still growing, but at a slower pace than it has recently.
Apple’s stock has slumped 39 percent since early October. The company also recently announced that it would stop disclosing how many iPhones it sold each quarter, a move many investors suspected was an attempt to hide bad news.
Apple took its biggest loss in six years and ended at $142.19. Microsoft fell 3.7, Intel 5.5 percent. The S&P 500 technology companies had their worst day since August 2011.
Among big industrial companies that could suffer from a drop in demand from China, Caterpillar declined 3.9 percent, Deere 2.7 percent and Boeing 4 percent.
“This situation is yet another example of how politics — in this case, the trade war — has exacerbated real but manageable economic concerns and turned them into something worse than they have to be,” Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote in a note to clients.
Bail sought for ex-Marine held in Moscow for alleged spying
MOSCOW — The defense lawyer for a former U.S. Marine who was arrested in Russia for alleged spying said Thursday that he is trying to get the American released from the Moscow prison where he has dealt well with his detention.
Michigan resident Paul Whelan, a 48-year-old corporate security director from the Detroit area, was arrested Friday on espionage charges. The Russian Federal Security Service, or FSB, hasn’t given details of what led to the charges.
In Russia, a spying conviction carries a prison sentence of 10 to 20 years.
Defense lawyer Vladimir Zherebenkov told The Associated Press he applied for Whelan to be released on bail that would be set at an amount determined later. The court would have 15 days after Russia’s winter holidays end Jan. 9 to make the decision, he said.
BEIJING — China’s burgeoning space program achieved a lunar milestone on Thursday: landing a probe on the mysterious and misnamed “dark” side of the moon.
Exploring the cosmos from that far side of the moon, which people can’t see from Earth, could eventually help scientists learn more about the early days of the solar system and maybe even the birth of the universe’s first stars.
Three nations — the United States, the former Soviet Union and more recently China — all have sent spacecraft to the side of the moon that faces Earth, but this landing is the first on the far side. That side has been observed many times from lunar orbit, but never up close.
The China National Space Administration said the 10:26 a.m. touchdown of the Chang’e 4 craft has “opened up a new chapter in human lunar exploration.”
Police: 3 young children found dead in Texas apartment
TEXAS CITY, Texas — Authorities in Texas are searching for a 27-yearold man after three young children were found dead Thursday in an apartment.
Police in Texas City, 48 miles southeast of Houston on the Gulf Coast, went to Pointe Ann Apartments on Thursday evening on a welfare check and discovered the children along with a woman with a gunshot wound to the head.
One of the children was an infant, another was 2 years old and the third was 5 years old, police said in a statement.
The woman was listed in stable condition at a Galveston hospital. Her relationship to the children was not immediately clear.
Texas City police Lt. Kenneth Brown told the Houston Chronicle that the woman is unable to speak to investigators. He described her injuries as severe.