Finance Finance News Wall St tech stocks hit seven-year low on Apple’s China warning

Wall St tech stocks hit seven-year low on Apple’s China warning

wall st plunge apple china
A rare revenue warning from Apple has sparked concerns for the Chinese economy. Photo: Getty
Twitter Facebook Reddit Pinterest Email

Wall Street has taken a battering as US technology stocks plunged to their worse loss in seven years after Apple reported a drop in China iPhone sales.

Apple’s rare warning of disappointing results stoked investor fears that the China 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 US manufacturing.

All three major US stock indexes finished down more than two per cent on Friday morning (Australian time), with the IT-heavy Nasdaq posting a three per cent loss.

Standard & Poor 500 technology companies slid 5.1 per cent, their biggest one-day percentage drop since August 2011.

On Thursday, Apple chief executive Tim Cook wrote in a letter to investors that the company had not foreseen the extent of China’s economic deceleration, which was exacerbated by US-China trade tensions.

The iPhone maker’s shares dropped 10 per cent.

Apple, which was until recently the largest publicly traded company in the US, is now worth less than IT rivals Microsoft, Amazon and Google’s parent company, Alphabet

A report from the Institute for Supply Management showed US factory activity in December suffered the biggest drop since October 2008, the height of the financial crisis.

“The Chinese slowdown was expected, but today’s softer-than-expected [supply] number took investors by surprise because the US seemed to be the only port in the storm,” Sam Stovall, chief investment strategist of CFRA Research in New York, said.

“But now it appears that our economic growth is facing trade related headwinds,” he added.

Major car makers reported weak US new car sales in December, with Ford Motor Co and General Motors Co reporting sales falling by 8.8 per cent and 2.7 per cent, respectively. Ford shares fell 1.5 per cent, while GM dropped 4.1 per cent.

The Dow Jones Industrial Average fell 660.02 points, or 2.83 per cent, to 22,686.22, the S&P 500 lost 62.14 points, or 2.48 per cent, to 2,447.89 and the Nasdaq Composite dropped 202.43 points, or 3.04 per cent, to 6,463.50.

Of the 11 major sectors in the S&P 500, all but defensive real estate and utilities stocks closed in the red.

Trade-sensitive industrials also weighed on the Dow, led by Caterpillar Inc, 3M Co and Boeing Co.

Bristol-Myers Squibb Co shares dropped 13.3 per cent after the drugmaker announced plans to buy rival Celgene Corp for about $US74 billion ($A106 billion). Celgene shares jumped 20.7 per cent on the news.)

-with AAP