1. Apple meltdown: A revenue warning from Apple is shaking stock markets.
Apple (AAPL) CEO Tim Cook has unnerved investors by warning them to expect lower sales from the holiday quarter, primarily because of weak demand for iPhones in China.
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Dow futures pointed to a much lower open, falling 335 points. S&P 500 futures were 1.5% lower and Nasdaq futures plunged 2.6%. Apple stock was poised to open down nearly 8%, a decline that would wipe $55 billion off its market value.
In a letter to investors on Wednesday, CEO Tim Cook blamed the disappointing outlook on China's ongoing trade war with the United States and a number of other factors, including the company offering cheaper iPhone battery replacements.
The warning from Apple underscores the key role that China plays in global trade, and the impact of weaker growth in the world's second-largest economy. China is a huge market for Apple, making up about 15% of its sales.
China is feeling the effects of a darkening trade outlook and government attempts to rein in risky lending after a rapid rise in debt levels. Growth in 2018 is set to be the weakest since 1990. And 2019 looks even worse.
2. Global impact: The sales warning hit shares in companies that provide components for iPhones and other Apple products.
Shares in Hon Hai Precision (HNHPD), better known as Foxconn, fell 2% in Taipei. Catcher Technology, a Taiwanese company that makes iPhone cases, dropped nearly 4%.
The losses contributed to a sour mood in global markets.
3. Shutdown continues: Negotiations to end the partial shutdown of US federal agencies, now well into its second week, are set to become even more difficult.
Democrats will grab significant leverage against President Donald Trump when they claim the House of Representatives in a reshuffling of Washington's balance of power on Thursday.
Trump told a group of lawmakers he can't accept Democrats' offer to re-open the government as the two sides negotiate border wall funding because he "would look foolish if I did that," according to a person familiar with the exchange.
The government shutdown probably won't mean much for the economy in the near term, but investors are worried the impasse may be a sign of troubles for the debt ceiling negotiations later this year.
4. Earnings and economics: Shares in UK fashion retailer Next (NXGPY) were up 4.5% after the company reported holiday sales that were not as bad as some investors expected.
The Institute for Supply Management will release its ISM Manufacturing Index for December at 10:00 a.m. ET.
US oil futures dropped 1.5% to $45.80 per barrel on Thursday, reversing some price gains from the previous session.
5. Coming this week:
Thursday — ISM manufacturing index
Friday — Jobs report for December