NEW YORK — Stocks went into a steep slide Thursday after Apple sent a shudder through Wall Street with word that iPhone sales in China are falling.

The rare warning of disappointing results from Apple reinforced investors’ fears that the world’s second-biggest economy is losing steam and that trade tensions between Washington and Beijing are making things worse.

The Dow Jones Industrial Average plunged as much as 677 points about an hour into trading, then began climbing back, but was still down more than 550 points at midafternoon. The broader S&P 500 index was down 2 per cent.

Apple stock plummeted 9.5 per cent, erasing $71 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.

“For a while now there’s been an adage in the markets that as long as Apple was doing fine, everyone else would be OK,” said Neil Wilson, chief markets analyst at Markets.com. “Therefore, Apple’s rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific.”

Investors were also unsettled by a report Thursday that showed signs of weakness in U.S. manufacturing.

The U.S.-China trade dispute threatens to snarl multinational companies’ supply lines and reduce demand for their products. Companies such as General Motors, Caterpillar and Daimler have all said recently that trade tensions, combined with slower growth in China, were damaging their businesses.

“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.

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.

As of 2 p.m., the S&P 500 was down 50 points to 2,459. The Dow had slid 571 points, or 2.5 per cent, to 22,774. The Nasdaq, which has a high concentration of tech stocks, retreated 170 points, or 2.6 per cent, to 6,495.

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 per cent since early October. 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 bad news.

Apple stock took its biggest loss in six years Thursday and was down to $142.94 in afternoon trading. Microsoft shed 3.1 per cent to $97.95. Among chip makers, Intel fell 4.5 per cent to $44.98.

Among big industrial companies, Caterpillar gave up 3.2 per cent to $122.35, and Deere lost 2.1 per cent to $145.03. Boeing, which sells many of its planes to China, declined 4.1 per cent to $310.58.

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 per cent and the French CAC 40 fell 1.7 per cent, and Britain’s FTSE 100 gave up 0.6 per cent. In Asia, tech-related stocks suffered most. South Korea’s Kospi ended 0.8 per cent lower and Hong Kong’s Hang Seng gave up 0.3 per cent.

Oil prices edged higher. U.S. crude rose 0.4 per cent to $46.71 a barrel in New York and Brent crude rose 1.1 per cent to $55.50 a barrel in London. Oil prices have nosedived almost 40 per cent 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 107.84 yen from 109.21 yen. The euro rose to $1.403 from $1.344. The British pound fell to $1.2638 from $1.2690.

Gold climbed 0.8 per cent to $1,294.80 an ounce. Silver rose 0.9 per cent to $15.80 an ounce. Copper, which is used in construction and wiring, fell 2.1 per cent to $2.57 a pound.

Pan Pylas contributed to this story from London.

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP </s> The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

NEW YORK (AP) — Stocks went into a steep slide Thursday after Apple sent a shudder through Wall Street with word that iPhone sales in China are falling.

The rare warning of disappointing results from Apple reinforced investors’ fears that the world’s second-biggest economy is losing steam and that trade tensions between Washington and Beijing are making things worse.

The Dow Jones Industrial Average plunged as much as 677 points about an hour into trading, then began climbing back, but was still down more than 600 points at 3 p.m. The broader S&P 500 index was down 2.2 percent.

Apple stock plummeted 9.7 percent, erasing $72 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.

“For a while now there’s been an adage in the markets that as long as Apple was doing fine, everyone else would be OK,” said Neil Wilson, chief markets analyst at Markets.com. “Therefore, Apple’s rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific.”

Investors were also unsettled by a report Thursday that showed signs of weakness in U.S. manufacturing.

The U.S.-China trade dispute threatens to snarl multinational companies’ supply lines and reduce demand for their products. Companies such as General Motors, Caterpillar and Daimler have all said recently that trade tensions, combined with slower growth in China, were damaging their businesses.

“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.

Cook’s comments echoed the concerns that have pushed investors to sell stocks over the last three months. Markets were wiped out in late 2018 and 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.

The S&P 500 was down 54 points to 2,455. The Dow slid 602 points, or 2.6 percent, to 22,743. The Nasdaq, which has a high concentration of tech stocks, retreated 180 points, or 2.7 percent, to 6,485.

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’s stock has slumped 38 percent since early October. 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 bad news.

Apple took its biggest loss in six years Thursday and was down to $142.66 in afternoon trading. Microsoft shed 3.3 percent to $97.79. Among chip makers, Intel fell 4.8 percent to $44.80.

Among big industrial companies, Caterpillar gave up 3.8 percent to $121.64, and Deere lost 2.4 percent to $144.52. Boeing, which sells many of its planes to China, declined 3.9 percent to $311.02.

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 1.2 percent to $47.09 a barrel in New York and Brent crude rose 1.9 percent to $55.95 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 107.78 yen from 109.21 yen. The euro rose to $1.1394 from $1.344. The British pound fell to $1.2633 from $1.2690.

Gold climbed 0.8 percent to $1,294.80 an ounce. Silver rose 0.9 percent to $15.80 an ounce. Copper, which is used in construction and wiring, fell 2.1 percent to $2.57 a pound.

In other commodities trading, wholesale gasoline rose 1.8 percent to $1.35 a gallon and heating oil climbed 2.4 percent to $1.74 a gallon. Natural gas fell 0.4 percent to $2.95 per 1,000 cubic feet.

Pan Pylas contributed to this story from London.

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP

The Associated Press contributed to this report.

We are committed to truth and accuracy in all of our journalism. Read our editorial standards. </s> SAN FRANCISCO — Apple warns that disappointing iPhone sales will cause a significant drop in its revenue over the crucial holiday season compared to earlier projections.

CEO Tim Cook made the announcement after the market closed Wednesday. It embodies some of the worst fears of investors, who have been dumping Apple shares amid signs that the latest iPhone models weren’t living up to expectations.
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Cook cited China as Apple’s biggest weak spot, but also said that consumers weren’t upgrading to the latest iPhones models as eagerly as anticipated.

As a result, Apple now expects revenue of US$84 billion for the fiscal quarter running from October through December. Management had previously predicted revenue ranging from US$89 billion to US$93 billion. </s> Apple Inc on Wednesday cut its sales forecast for its latest quarter, with Chief Executive Tim Cook blaming slowing iPhone sales in China, whose economy has been dragged down by uncertainty around U.S.-China trade relations.

REUTERS: Apple Inc on Wednesday took the rare step of cutting its quarterly sales forecast, with Chief Executive Tim Cook blaming slowing iPhone sales in China, whose economy has been dragged down by uncertainty around U.S.-China trade relations.

The news sent Apple shares tumbling in after-hours trade and triggered a broader selloff in the stock market.

The revenue cut for the just-ended quarter raises questions about whether Apple, the face of American business in many parts of the world, is being punished by Chinese officials or consumers in favour of local rivals such as Huawei Technology Cos Ltd, whose pricey smart phones compete with the iPhone and which has been under discussion by the Trump administration for a possible sales ban over suggestions that its telecommunications equipment could be used to spy on Americans.

Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple device because it is an American company.

“The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it,” Cook said.

Some analysts, however, questioned the impact of Apple's own actions, such as its unyielding pursuit of high selling prices for its products.

Apple on Wednesday lowered its forecast to US$84 billion in revenue for its fiscal first quarter ended Dec. 29, below analysts' estimate of US$91.5 billion, according to IBES data from Refinitiv. Apple originally forecast revenue of between US$89 billion and US$93 billion.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook said 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."

Wednesday was the first time that Apple issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007.

Apple shares skidded 7.7 percent in after-hours trade, dragging the company's market value below US$700 billion. In the broader market, the S&P 500 futures fell 1.5 percent. In the U.S. government bond market, a typical safe-haven, the yield on the benchmark 10- year, which moves inversely to the bond's price, sank to an 11-month low.

Apple's move was not entirely a surprise. In November, the Cupertino, California-based company said it would quit disclosing unit sales data for iPhones and other hardware items, leading many analysts to worry that a drop in iPhone sales was coming. And after several component makers in November forecast weaker-than-expected sales, some market watchers called the peak for iPhones in several key markets.

In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for a lower-than-anticipated sales estimates for the company's fiscal first quarter. But Cook specifically said he "would not put China in that category" of countries with troubled growth.

That all came before the damage to the Chinese economy from trade tensions with the United States and long-simmering structural issues became evident.

Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business. Automakers such as Ford Motor Co , Hyundai Motor Co and Nissan Motor Co all previously said they planned to cut production in the country.

But Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy.

"The question for investors will be the extent to which Apple’s aggressive pricing has exacerbated this situation and what this means for the company’s longer-term pricing power within its iPhone franchise," James Cordwell, an analyst at Atlantic Equities, told Reuters.

In the latest fiscal year, ended Sept. 29, unit sales of the iPhone were essentially flat from the prior year, while iPhone revenue expanded 18 percent to US$166.7 billion. That growth came entirely from higher prices.

Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Cook's comments on the impact of the U.S. trade tensions with China "might be a dig at (U.S. President Donald) Trump, but mostly he may be using the trade turmoil as an excuse for some missteps they’ve made over the last year."

But some investors were heartened by Apple's plans on using its cash pile.

In his letter, Cook said Apple has US$130 billion in net cash and that it intends to continue its efforts to reduce that cash balance to net zero, which the company has so far accomplished through dividend increases and share buybacks.

"We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices," said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners. </s> NEW YORK (AP) — Stocks went into a steep slide Thursday morning 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 markets and reinforced fears among investors that the world's second-largest economy is weakening.

The Dow Jones Industrial Average fell more than 600 points about an hour into trading. The broader S&P 500 index was down 2.4 percent.

Apple's stock plunged 10 percent, erasing $67 billion in value. Other big exporters, including technology and machinery companies, also took big losses.

Some of the worst drops were at chipmakers that make components used in smartphones and other gadgets. The U.S.-China trade dispute, nearly a year old, threatens to snarl their supply lines and reduce demand for their products.

The losses deepened after a survey of U.S. manufacturers also showed signs of weakness.

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.

The S&P 500 dropped 60 points to 2,449. The Dow slid 642, or 2.7 percent, to 22,707. The Nasdaq, which has a high concentration of tech stocks, retreated 185 points, or 2.8 percent, to 6,482.

"For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK," said Neil Wilson, chief markets analyst at Markets.com. "Therefore, Apple's rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific?"

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.

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.

U.S. government bond prices, gold and high-dividend stocks like utilities all rose as investors looked for safer places to put their money.

Apple stock has slumped 38 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 hid disappointing news.

Apple stock had fallen to $143.58 at mid-morning. Microsoft shed 1.6 percent to $99.46. In the chip industry, Intel fell 4.1 percent to $45.17, and Qualcomm lost 2.4 percent to $56.04, while Skyworks skidded 7.6 percent to $62.77.

Among big industrial companies, Caterpillar gave up 3.5 percent to $121.90, and Deere lost 2.5 percent to $144.93.

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 import taxes.

Bonds prices jumped. The yield on the 10-year Treasury note fell to 2.58 percent from 2.66 percent late Wednesday, a large move.

Markets overseas held up a bit better. Germany's DAX and the French CAC 40 both fell 1.2 percent, and Britain's FTSE 100 dipped 0.2 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 were little changed. U.S. crude stayed at $46.52 a barrel in New York and Brent crude rose 0.4 percent to $55.13 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 107.46 yen from 109.21 yen. The euro rose to $1.1403 from $1.344. The British pound fell to $1.2596 from $1.2690.

Gold also rose, by 0.6 percent to $1,291 an ounce.

Some experts believe that the market volatility could eventually lead to changes in the policies that are worrying investors. The Federal Reserve, for example, could slow the pace of its interest rate increases if markets continue to drop. And President Donald Trump could become more open to settling the trade dispute with China.

"It is a well-known fact that Trump perceives the markets as a true barometer of his presidency," said Piotr Matys, a strategist at Rabobank International.

Pan Pylas contributed to this story from London.

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP </s> NEW YORK (AP) — Stocks went into a steep slide Thursday morning after Apple reported a slowdown in iPhone sales over the holidays in China, a hugely important market for the company.

The rare warning from Apple sent a shudder through markets and confirmed fears among investors that the world's second-largest economy was weakening.

The Dow Jones Industrial Average fell more than 600 points about an hour into trading.

Apple's stock plunged 10 percent, erasing $67 billion in value. Other big exporters including technology and machinery companies also took big losses.

Some of the worst drops went to chipmakers that make components used in smartphones and other gadgets. The trade dispute, nearly a year old, threatens to snarl their supply lines and reduce demand for their products. Tariffs and other trade sanctions could add to their difficulties.

The losses deepened after a survey of U.S. manufacturers also showed signs of weakness. The benchmark S&P 500 index was down 2.4 percent as of 10:45 a.m.

In a letter to shareholders on Wednesday, Apple CEO Tim Cook said iPhone demand was 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, according to FactSet.

Apple's warning, its first since 2002, deepened concerns about the Chinese economy, which had been showing signs of stress.

The S&P 500 dropped 60 points to 2,449. The Dow slid 642, or 2.7 percent to 22,707. The Nasdaq composite, which has a high concentration of tech stocks, retreated 185 points, or 2.8 percent, to 6,482.

"For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK," said Neil Wilson, chief markets analyst at Markets.com. "Therefore, Apple's rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific?"

Apple's warning couldn't have come at a worse time for stock market investors given the wipeout in late 2018, when many global indexes posted their worst performances in a decade amid concerns about the global economy and the prospect of further U.S. interest rate hikes.

A weak report on U.S. manufacturing was also weighing 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.

In times of market stress and volatility, there are some assets that traditionally do well as investors perceive them as safer to hold. U.S. government bond prices, gold and high-dividend stocks like utilities all rose.

Apple stock has slumped 38 percent since early October as investors feared a sales slowdown in China. The company also recently announced that it would stop disclosing how many iPhones it sold each quarter, and many investors felt that suggested the company was trying to hide signs that its sales were cooling off. Its stock fell to $143.58.

Other major tech companies have also taken huge losses over the last three months as the market endured its worst slump in almost a decade. While stocks rebounded slightly at the end of 2018, Apple's troubles added to their losses Thursday. Microsoft shed 1.6 percent to $99.46. In the chip industry, Intel fell 4.1 percent to $45.17 and Qualcomm lost 2.4 percent to $56.04 while Skyworks skidded 7.6 percent to $62.77.

Among big industrial companies, Caterpillar gave up 3.5 percent to $121.90 and Deere lost 2.5 percent to $144.93. Companies that make heavy machines like construction equipment are facing less demand as China's economy, the largest in the world after the U.S., loses strength. They're also dealing with higher costs for metals as a result of import taxes.

Bonds prices jumped. The yield on the 10-year Treasury note fell to 2.58 percent from 2.66 percent late Wednesday, a large move.

Markets overseas held up a bit better. Germany's DAX and the French CAC 40 both fell 1.2 percent, and Britain's FTSE 100 dipped 0.2 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 were little changed. U.S. crude stayed at $46.52 a barrel in New York and Brent crude rose 0.4 percent to $55.13 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 107.46 yen from 109.21 yen. The euro rose to $1.1403 from $1.344. The British pound fell to $1.2596 from $1.2690.

Gold also rose, by 0.6 percent to $1,291 an ounce.

Some experts believe that the market volatility could eventually lead to changes in the policies that are concerning investors. The Fed, for example, could slow the pace of its interest rate increases if markets continue to drop. And U.S. President Donald Trump could become more open to settling the trade dispute with China.

"It is a well-known fact that Trump perceives the markets as a true barometer of his presidency," said Piotr Matys, a strategist at Rabobank International.

Pan Pylas contributed to this story from London.

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP </s> When Apple issues a profit warning, you know something’s up.

The tech company did just that on Wednesday, with CEO Tim Cook citing a slew of factors weighing heavily on its business during the holiday quarter and heading into 2019.

The bottom line is that Apple is currently selling fewer phones than it expected, prompting the company to revise down its sales forecasts for the final three months of 2018.

In a letter to investors that spooked the market and wiped $55 billion off the value of the tech colossus, Cook suggested the company may have missed as much as $9 billion in sales for the quarter. This, he said, was the result of pressure on the global economy and Apple’s failure to “foresee the magnitude of the economic deceleration, particularly in Greater China. ”

The CEO said, “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.”

It was Cook’s view that “the economic environment in China has been further impacted by rising trade tensions with the United States,” a reference to the ongoing trade war between the U.S. and China.

He continued: “As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed,” adding that market data revealed the contraction in China’s smartphone market has been “particularly sharp.”

Weaker-than-expected demand for iPhone upgrades in developing markets was also cited as a factor, as was a strong U.S. dollar and an earlier launch timing of the iPhone XS and XS Max compared to the iPhone X. Cook’s letter also pointed to “customers taking advantage of significantly reduced pricing for iPhone battery replacements,” a service that Apple launched in 2018 but which ended on December 31.

Interestingly, in his letter Cook declined to mention the rise of Chinese rivals as a reason for the squeeze on iPhone sales. Huawei, for example, sold 200 million phones (includes sister brand Honor) in 2018, making it the world’s second biggest smartphone manufacturer after Samsung. Apple sits in third spot.

Keen not to leave investors feeling too gloomy, the CEO said that despite the current difficulties, Apple’s business in China “has a bright future,” insisting that the company’s products “enjoy a strong following among customers, with a very high level of engagement and satisfaction.”

Apple’s profit warning is the first from the company in 16 years, and its first since the launch of the iPhone in 2007. But the with sales of $84 billion still expected — revised down from between $89 billion and $94 billion — few will view the current situation as a crisis for the tech firm.

In any case, its current struggles reflect the growing challenge faced by smartphone makers around the world after reports toward the end of 2018 highlighted a 6 percent drop in handset sales globally, with China again cited as one of the primary factors in the fall. </s> Apple CEO Tim Cook published a letter to investors today warning of weaker than expected first-quarter earnings, citing “fewer iPhone upgrades than we had anticipated.” The weakened demand came primarily from China, although Cook notes that “in some developed markets, iPhone upgrades also were not as strong as we thought they would be.”

People just aren’t buying as many new iPhones as Apple hoped

In his letter, Cook offers several explanations for the lower earnings guidance: earlier launch timing of the iPhone XS and XS Max compared to the iPhone X, the strength of the US dollar, supply constraints due to the number of new products Apple released in the fall, and overall economic weakness in some markets. But the core issue remains simple: people just aren’t buying as many new iPhones as Apple hoped.

EXCLUSIVE: After cutting Q1 expectations, Apple CEO Tim Cook tells CNBC that the shortfall is primarily in Greater China as trade tensions put pressure on the Chinese economy https://t.co/iOf79ebo17 pic.twitter.com/Lm7Wyp1VOX — CNBC Now (@CNBCnow) January 2, 2019

Per Cook’s letter, “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline.” Cook notes that other divisions of Apple have actually risen by almost 19 percent year over year, but the truth remains that the iPhone has long been Apple’s core business, and if Apple can’t sell enough of them, the whole company struggles.

In an interview with CNBC, Cook elaborates on the shortfall, pointing out that “the trade tensions between the United States and China put additional pressure on their economy,” which resulted in fewer customers. But Cook also mentioned fewer carrier subsidiaries on new iPhones, as well as the dramatically lowered battery replacement price for older models (due to Apple’s iPhone slowdown drama from late 2017), as contributing factors.

All in all, Apple’s revised Q1 guidance forecast is dropping by up to $9 billion in revenue compared to its original estimate. Apple’s stock dropped by nearly 10 percent once trading resumed. </s> Apple is selling fewer iPhones and making less money. Blame China.

"Apple CEO Tim Cook threw China under the proverbial bus," says Brendan Ahern, CIO of KraneShares in New York. "There is little evidence that China’s economic slowdown is the primary cause of Apple’s woes," he says, adding that Cook listed other factors for weaker sales, including a strong dollar and lackluster iWatch sales. "The reality is Apple’s phones are expensive relative to local brands and when combined with a lack of significant upgrades, iPhones are simply not resonating with Chinese consumers," he says.

Newcomers Huawei and Xiaomi are gaining market share. Third quarter and year-to-date smartphone sales data from IDC show Apple has been in decline for years, losing to Samsung and local competitors. Here in the U.S., the only real competitor is Samsung. Plus phone carriers like Verizon have protected Apple by offering sweet deals to lure in customers. Apple's problems are not just because of China. Apple’s fourth quarter will show declines in the U.S. as well, likely leading to a ramp up of their share buyback program.

But Tim Cook's China comments opened a Pandora's Box for China investors and has put the trade war back in focus. Many analysts believe that the tariffs imposed on over $250 billion worth of Chinese imports will start cutting into corporate profit margins in the first quarter. Some companies have already talked about this in third quarter earnings calls.

With tax cut stimulus wearing thin, capital costs rising, and import costs going up, China is one of the biggest headwinds to the U.S. stock market.

China is also slowing on account of economic reforms and the trade dispute with Washington. A weaker China is no longer a theory concocted by the China haters.

Baidu CEO and billionaire Robin Li said "winter is coming" to the Chinese economy. The slowdown has led to hiring freezes and job cuts in the tech industry and work furloughs among state workers ahead of the Chinese New Year. Li commented on the slowdown in a letter to investors. He tried putting a positive spin on it, focusing on the long term. However, Li's comments plus Cook's comments on Apple sales equals a deteriorating China outlook.

China's economy is massive. It's stock market is not a good indicator of economic strength. The Shanghai and Shenzhen stock indexes are in bear territory, down over 30% in the last 12 months. Still, the Chinese economy is not heading for a recession.

Industrial production growth fell to 5.4% annualized in November from 5.9% in October. Nomura Securities analysts in Hong Kong led by Ting Lu said Thursday that they expect it to hold steady in December due to the positive effects of front-loading exports and the less aggressive anti-pollution push. Nomura cut their fourth-quarter GDP growth forecast today to 6.4% from 6.5%. Even discounting those numbers by 50% still has China growing, though clearly not enough for a developing economy of that size.

Retail sales growth is likely to have fallen a bit in December from the 8.1% mark in November. On trade, export and import growth might have picked up due to the trade truce as China buys more U.S. commodities.

China’s non-manufacturing PMI is still solid, hitting 53.8 in December from November’s 53.4.

The country is busy playing defense against Trump's trade war, and the cyclical slowdown. The central bank is allowing state banks to lower their reserve requirements to speed up lending to mid-sized and smaller businesses.

Meanwhile, the South China Morning Post is full of headlines this week warning of pending disaster between Beijing and Washington, despite the 90-day trade truce initiated by Xi Jinping at the G20 Summit in Argentina in November.

According to a Bloomberg report quoting two people familiar with the matter, a U.S. government delegation led by deputy U.S. Trade Representative Jeffrey Gerrish will travel to Beijing on January 7 for face-to-face trade talks. The market will be hoping for some good news to come out of those meetings.

The trade war may be part of Apple's problems. But for Washington, and for many China experts, the first shots of that trade war were started in Beijing over 17 years ago.

"China has adopted an alternative path that simply seeks to treat its market in the way in which it wants regardless of the rules or commitments made and therefore impinges on the rights of China's trading partners regardless of the rights that they have," said Charlene Barshefsky in the South China Morning Post. Barshefsky was part of the Clinton-era team that brought China into the World Trade Organization in 2001. "This is a very disturbing outcome not in China's interests, as we see China's economy was slowing before all of this trade stuff happened."
American electronics maker Apple warns that iPhone sales are slowing significantly and the product is in weak demand, blaming trade tensions with China. The company says that it has lowered its expected fiscal earnings for the first quarter as a result, citing disappointing holiday sales figures, and that it could lose $9 billion due to the decline.