By Kevin Kelleher
January 3, 2019

U.S. stocks suffered another day of volatile declines, with the Dow Jones Industrial Average falling 660 points, or nearly 3%, as Apple’s warning that revenue in the busy holiday quarter would be weaker than expected amplified concerns about a global economic slowdown.

Apple is not only one of the most widely held stocks, it’s a longtime bellwether for Silicon Valley. The stock plunged nearly 10% Thursday to $142.19 a share, its biggest one-day decline in six years. Apple closed trading Thursday at its lowest level since March 2017.

Late Wednesday, Apple CEO Tim Cook published a letter to investors that said that a slowdown in sales in China would cause revenue to fall 4.8% year over year to $84 billion, well below what analysts had been forecasting. The news caused other tech and consumer stocks to fall, especially multinational companies with exposure to China.

The Dow fell 660.02 points, or 2.8%, to 22,686.22. The S&P 500 Index declined 62.14 points, or 2.5%, to 2447.89. The tech-heavy Nasdaq Composite, slid 202.43 points, or a little more than 3%, to 6463.50.

Also adding to investor concerns was a report that showed manufacturing activity in U.S. factories was slowing to its lowest level in two years. The Institute for Supply Management said U.S. factory activity saw its biggest decline since October 2008, during the financial crisis a decade ago.

“The Chinese slowdown was expected but today’s softer-than-expected ISM number took investors by surprise because the U.S. seemed to be the only port in the storm,” Sam Stovall, chief investment strategist of CFRA Research, told Reuters. “But now it appears that our economic growth is facing trade related headwinds.”

Three months of stock declines have left investors cautious about the prospect for corporate earnings in 2019, with some concerned that Apple is only among the first major company to revise down estimates. Shares of other tech companies also declined Thursday, with Microsoft’s stock down 3.7%, Amazon’s stock down 2.5%, Alphabet down 2.8% and Facebook down 2.9%. Among the FAANG stocks, only Netflix closed up Thursday with a gain of 1.3%.

Because Apple is a core holding of many companies and investment funds, its plunge Thursday also carried shock waves to non-tech sectors. Berkshire Hathaway’s stock fell 4.3% after Apple’s decline created a paper loss for the holding company that was estimated at $3.8 billion. According to Bloomberg, eight hedge funds that had significant stakes in Apple also saw the paper value of their holdings decline by more than $2 billion.

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