NEW YORK (AP) — Stocks went into a steep slide Thursday on Wall Street after Apple reported a slowdown in iPhone sales over the holidays in China, a hugely important market for the company.
The rare warning of disappointing results from Apple sent a shudder through the market and reinforced fears among investors that the world's second-largest economy is weakening.
The Dow Jones Industrial Average plunged as much as 677 points about an hour into trading before reversing course, but was still down more than 400 points early in the afternoon. The broader S&P 500 index was down 1.5 percent.
Apple's stock plummeted 8.2 percent, erasing $61 billion in value. Other big exporters, including technology and heavy-machinery companies, also took big losses. Some of the worst drops were at chipmakers that make components used in smartphones and other gadgets.
Growing signs of a slowdown in China weighed on the market, as did the U.S.-China trade dispute, which threatens to snarl multinational companies' supply lines and reduce demand for their products. Investors were also unsettled by a report Thursday that showed signs of weakness in U.S. manufacturing.
"When the largest and second-largest economies in the world get into a trade dispute, the rest of the world's going to feel the effects. That's what we're seeing now," said Jack Ablin, chief investment officer of Cresset Wealth Advisors.
In a letter to shareholders Wednesday, Apple CEO Tim Cook said iPhone demand is waning in China and would hurt revenue for the October-December quarter. Cook said Apple expects revenue of $84 billion for the quarter. That's $7 billion less than analysts expected.
As of 12:45 p.m., the S&P 500 was down 37 points to 2,472. The Dow had slid 1.9 percent to 22,909. The Nasdaq, which has a high concentration of tech stocks, retreated 128 points, or 1.9 percent, to 6,537.
Apple's warning couldn't have come at a worse time for stocks given the wipeout in late 2018. Many global indexes posted their worst year in a decade amid concerns about the global economy and the prospect of further U.S. interest rate increases.
U.S. government bond prices jumped, sending yields to their lowest level in almost a year, and gold and high-dividend stocks like utilities also rose as investors looked for safer places to put their money.
A weak report Thursday on U.S. manufacturing also weighed on the market. The Institute for Supply Management said its index of manufacturing fell to its lowest level in two years, and new orders have fallen sharply since November. Manufacturing is still growing, but at a slower pace than it has recently.
Apple stock has slumped 37.5 percent since early October amid fears of a slowdown in China. The company also recently announced that it would stop disclosing how many iPhones it sold each quarter, a move many investors suspected was an attempt to hide disappointing news.
Apple stock had fallen to $144.96 in afternoon trading. Microsoft shed 2.3 percent to $98.75. In the chip industry, Intel fell 4.1 percent to $45.13.
Among big industrial companies, Caterpillar gave up 2.6 percent to $123.06, and Deere lost 1.1 percent to $146.44. Boeing, which sells many of its planes to China, declined 2.8 percent to $314.88.
Companies that make heavy machinery such as construction equipment are facing less demand as China's economy, the largest in the world after the U.S., loses strength. They are also dealing with higher costs for metals as a result of tariffs.
Markets overseas also stumbled. Germany's DAX dropped 1.5 percent and the French CAC 40 fell 1.7 percent, and Britain's FTSE 100 gave up 0.6 percent. In Asia, tech-related stocks suffered most. South Korea's Kospi ended 0.8 percent lower and Hong Kong's Hang Seng gave up 0.3 percent.
Oil prices edged higher. U.S. crude rose 0.6 percent to $46.84 a barrel in New York and Brent crude rose 0.7 percent to $55.33 a barrel in London. Oil prices have nosedived almost 40 percent since early October, and investors' fears about falling demand in China and elsewhere were a key reason for the decline.
The dollar weakened. It fell to 107.91 yen from 109.21 yen. The euro rose to $1.402 from $1.344. The British pound fell to $1.2633 from $1.2690.
Gold also rose, climbing 0.6 percent to $1,291 an ounce.
Pan Pylas contributed to this story from London.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP