US stock futures were sharply lower after the market closed Wednesday, following Apple’s announcement
that it would miss its sales target for its fall quarter. Apple blamed weak Chinese sales for its revised forecast, reinforcing investors’ concerns that China’s slowing economy is already hurting earnings for multinational companies.
pointed to a much lower open Thursday morning, falling 370 points. The S&P 500 futures were 1.5% lower and Nasdaq futures were down by 2.4%.
) announced Wednesday after the closing bell that it would report lower-than-expected sales from the last three months of 2018, primarily because of weak demand for iPhones in China. In a letter to investors
, CEO Tim Cook blamed the disappointing outlook on China’s ongoing trade war with the United States and a number of other factors, including the company offering cheaper iPhone battery replacements.
The company’s warning rattled Wall Street investors who were already jittery about China. Apple’s announcement suggests corporate earnings estimates may be too lofty given challenges facing the global economy. Apple provided some of the starkest evidence of the negative consequences of the US-China trade war.
The news hit shares in some Asian companies that provide components to Apple. Hon Hai Precision (HNHPD
), better known as Foxconn, fell 2% in Taipei trading Thursday morning. Catcher Technology, which makes iPhone cases, dropped nearly 4%.
What happens in China matters for businesses and markets across the globe. It’s the world’s largest exporter of goods, sucking in materials from other countries in order to ship out iPhones, laptops, bulldozers and tons of other products.
The country’s rapidly expanding middle class has turned it into the biggest market on the planet for consumer goods like cars, smartphones and beer, generating billions in profits for companies like General Motors and Apple.
But after decades of expansion, the Chinese economy is slowing down
. Growth in 2018 is set to be the weakest since 1990. And 2019 looks even worse. The world’s second largest economy, China is feeling the effects of a darkening trade outlook and government attempts to rein in risky lending after a rapid rise in debt levels.
That has created a period of historic volatility in the stock market. Investors, fearful that a Chinese economic slowdown could stunt growth in companies around the globe, have sent stocks rising and (mostly) tumbling sharply
in recent weeks and months. Between December 14 and 24, the Dow fell 350 points in six of seven sessions
But stocks could bounce back. Futures were down by about the same amount Wednesday morning, yet stocks plummeted in early trading before rallying back
on optimism that supply constraints in the oil market may be under control. The Dow bounced back from a 399-point drop, closing Wednesday 19 points higher.
Daniel Shane contributed to this report.