Wall Street tumbled on Thursday after Apple blamed trade tensions with China, fueled partly by President Trump’s tariffs, for a gloomier sales outlook, wiping out tentative gains from the first trading day of 2019.
The blue-chip Dow Jones Industrial Average sank 2.8 percent to 22,685 in New York trading, while the broader S&P 500 dropped 2.5 percent and the tech-heavy Nasdaq slid 3 percent. All three indexes are now in the red for the new year.
Apple, which warned investors on Wednesday that revenue for the three months through December would be about 10 percent lower than its forecast of as much as $93 billion, sank 9.5 percent to $142.96. The Cupertino, Calif.-based company blamed the shortfall on the timing of iPhone launches and supply shortfalls for new products as well as a slowing Chinese economy.
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” CEO Tim Cook said in a letter to investors. “As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well,” he said, and traffic to Apple stores in the country dropped.
Cook’s assessment adds to concern from executives, economists, and GOP lawmakers that Trump’s protectionist trade policies, including tariffs on $250 billion on Chinese imports, will undermine global growth, curb the benefits from 2017’s tax cuts, and increase volatility in financial markets, which slid at the end of 2018.
Trump has largely shrugged off such concerns, maintaining that the duties he has imposed on allies and rivals alike will ultimately buoy U.S. growth and referring to stock market tantrums in December as a “glitch.”
The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done!
— Donald J. Trump (@realDonaldTrump) January 3, 2019
“The United States Treasury has taken in many billions of dollars from the tariffs we are charging China and other countries that have not treated us fairly,” Trump said in a Twitter post on Thursday. “At some point, this had to be done.”
