Markets crashed on Thursday following Apple’s CEO Tim Cook’s announcement that the tech mega-cap had slashed its revenue guidance for the first quarter. Cook also stated that the ongoing trade war between the United States and China would hurt many big companies in America. Further, lackluster U.S. manufacturing data, the weakest since 2008, also added to investors’ fears. Consequently, the three major benchmarks ended in negative territory.
The Dow Jones Industrial Average (DJI) decreased almost 2.8%, to close at 22,686.22. The S&P 500 also decreased 2.5% to close at 2,447.89. The tech-laden Nasdaq Composite Index closed at 6,463.50, losing 3%. The fear-gauge CBOE Volatility Index (VIX) increased 3.8% to close at 24.10. A total of around 8.11 billion shares were traded on Thursday, lower than the last 20-session average of 9.16 billion shares. Decliners outnumbered advancers on the NYSE by a 1.84-to-1 ratio. On Nasdaq, a 2.47-to-1 ratio favored declining issues.
Apple’s Sales Forecast Rattles Markets
Apple’s AAPL CEO Tim Cook announced on Wednesday evening that the tech behemoth was slashing its revenue forecast for the first time in the last 15 years. The iPhone maker attributed such a move to economic weakness in China. Cook also stated that the company expects its first quarter revenue to be $84 billion as compared to the earlier guidance in the range of $89 billion to $93 billion. Following such news, Apple’s shares declined 10% to post its worst single day drop in terms of percentage since 2013.
Apple also stated that investors are worried that the ongoing trade war between the United States and China is hurting some of the biggest companies in the United States. Moreover, such events are also hampering the overall growth outlook as well as expectations of a bull run in markets. Meanwhile, China’s Caixin manufacturing purchasing managers index declined to 49.7 last month – its lowest levels since February 2016.
Adding to investors’ fears was lackluster U.S. manufacturing data in December. The Institute for Supply Management (ISM) announced that its manufacturing index dipped to 54.1% in December from 59.3% in the previous month. The last time ISM’s index fell so steeply was during the 2008 financial crisis and in 2001 after the 9/11 attacks.
How Did the Benchmarks Perform?
The Dow dropped a little over 660 points on Wednesday to post its worst start to the year since 2000. Losses for the Dow were intensified by Apple’s meltdown and global economic weakness. Trade-sensitive stocks such as The Boeing Company BA and Caterpillar Inc. CAT declined 4% and 3.9%, respectively following such developments.
Further, Apple also led the broader tech sector lower. Shares of chip stocks such Advanced Micro Devices, Inc. AMD , NVIDIA Corporation NVDA , Skyworks Solutions, Inc. SWKS and Qorvo, Inc. QRVO declined 9.5%, 6%, 10.7% and 9.1%, respectively. The Nasdaq declined 202.4 points to close in the red and posted it worst opening since 2005. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Finally, the S&P 500 declined 62.1 points to close in the negative territory. The broad-based index posted its worst opening to the year since 2000. Of the 11 sectors of the S&P 500, only real estate ended in the green. The laggards were led by technology stocks. For the record, Technology Select Sector SPDR ETF (XLK) declined 5.1%.
Per the latest report from ADP ADP , the private sector added 217,000 new jobs to the U.S. economy in December. The Labor Department stated that approximately 231,000 citizens filed jobless claims in the final week of 2018.
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