Stocks plunge after Apple slashes earnings forecast

Stocks tanked Thursday morning after Apple slashed its earnings forecast, citing an unexpected drop in global orders caused by trade tensions.

The Dow Jones Industrial Average dropped as many as 650 points Thursday morning, while the Nasdaq composite and S&P 500 index dropped 2.7 percent and 2.3 percent, respectively. A sharp plunge in technology and industrial stocks drove broad losses across the market in the first hours of trading.

Apple stock plummeted 10 percent lower Thursday morning, a day after CEO Tim Cook announced the company is now projecting first-quarter revenue of $84 billion after initially predicting between $89 billion and $93 billion.

Cook blamed Apple’s shortfall on the mounting costs of President TrumpDonald John TrumpFive takeaways from the Democratic debate As Buttigieg rises, Biden is still the target Leading Democrats largely pull punches at debate MORE’s tariffs on steel, aluminum and Chinese imports, along with trouble in emerging market economies. His warning was the latest red flag to indicate a potential global economic slowdown.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote in a letter to investors.

“In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”

Kevin Hassett, chairman of the White House Council of Economic Advisers, on Thursday, said that plenty of other U.S. companies will face losses in China until Beijing agrees to a new trade deal.

“It’s not going to be just Apple,” Hassett said in an interview on CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”

Trump and Chinese President Xi Jinping face a self-imposed deadline of March 1 to strike a deal to lift tariffs and other trade barriers. Trump sought to calm the market Thursday, insisting on Twitter that his administration is “doing well in various Trade Negotiations currently going on.”

“At some point this had to be done!” Trump tweeted.

Apple’s revision is the latest in a string of dismal economic headlines to start 2019. December manufacturing activity in the U.S., Asia and Europe fell below expectations, according to data released Thursday and Wednesday, while tech giants like Netflix and Tesla also missed sales goals.