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Apple is feeding some of Wall Street’s biggest fears.

US stocks dropped sharply on Thursday after Apple warned it will badly miss its quarterly sales forecast because of weakening growth and trade tensions in China. Apple (AAPL), among the world’s most widely held stocks, plummeted 10% and fell to the fourth-biggest public company behind Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL).

The news sent shudders through global markets. The Dow declined 650 points, or 2.8%, while the S&P 500 retreated 2.4%. The Nasdaq plunged 2.8%, putting it on track to close in a bear market.

US stocks took another hit after the December ISM US manufacturing index plunged by the most since October 2008. The closely-watched barometer of factory activity tumbled to a two-year low, providing further evidence of slowing growth and pain from the US-China trade war. ISM said manufacturing activity is still growing, but suffered a “sharp decline” last month.

“Awful, and worse to come,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote to clients on Thursday. “Trade wars are not easy to win.“

Apple’s bombshell

Apple’s stark warning reinforced multiple investor concerns. First, it suggests that analysts may be too optimistic about corporate earnings in the challenging global environment. And Apple’s trouble navigating China backs fears that the slowdown in the world’s No. 2 economy is already hurting profits for multinational companies.

“Trade tensions between the US and China could take an increasing toll on companies in both nations,” UBS strategists Christopher Swann and Kiran Ganesh wrote in a note to clients on Thursday.

Shares of China-sensitive stocks like Boeing (BA), Tiffany (TIF), Deere (DE) and Qualcomm (QCOM) dropped on Thursday.

Even Trump officials are warning of more China trouble ahead for Corporate America. Kevin Hassett, chairman of the White House’s Council of Economic Advisers, told CNN’s Poppy Harlow on Thursday that “a heck of a lot” of US companies with sales in China will follow Apple’s footsteps by downgrading their outlooks.

“It’s not going to be just Apple,” Hassett said, adding that sales will recover if trade negotiations with China are successful.

Trade war fallout

The Apple news is “feeding fears of slower global growth and further risk aversion,” Kit Juckes, strategist at Societe Generale, wrote in a note to clients on Thursday. Juckes said it also supports “soft” manufacturing numbers out of China in recent days showing activity has contracted.

And Apple CEO Tim Cook offered some of the starkest evidence yet of the negative consequences of the US-China trade war. Cook said “rising trade tensions” with the United States are impacting China’s economy. The trade uncertainty “appeared to reach consumers,” with customer traffic in China declining, he said.

But some analysts cautioned that Apple’s troubles may be more company specific than global in nature. Apple’s iPhone price hikes have hurt demand, especially as customers upgrade their smartphones less frequently.

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The global market for +$700 phones has clearly topped out,” Nicholas Colas, co-founder of DataTrek Research, wrote to clients on Thursday.

In any case, Apple suppliers predictably plunged on the developments. Cirrus Logic (CRUS), Skyworks Solutions (SWKS) and Broadcom (AVVGO) were all sharply lower. Best Buy (BBY), another company that relies on Apple products, declined 2%.

Jobs report is next

Major US airline stocks descended after Delta Air Lines (DAL) warned that revenue for the quarter was a bit weaker than its earlier guidance due to softness in fares, particularly in December. Delta plunged 9%, while United Continental (UAL) and Southwest (LUV) lost more than 4% apiece.

Investors failed to find much solace in better news elsewhere. ADP said on Thursday that the United States added 271,000 private-sector jobs in December, easily topping estimates. And Bristol-Myers Squibb (BMY) showed strong confidence by shelling out $74 billion in a blockbuster deal to acquire drug maker Celgene (CELG). Shares of Celgene spiked more than 30% on the mega takeover, while Bristol-Myers fell.

Thursday’s selloff shows how many of the same fears that made 2018 the US stock market’s worst in a decade are still roiling markets. Stocks started 2019 with a tumble at Wednesday’s opening bell before reversing course and closing solidly higher. The Nasdaq extended its win streak to five days, its longest since August.

Attention will now turn to Friday’s US jobs numbers. A weak December report could reinforce jitters that the US economy is slowing. On the other hand, stronger-than-expected payroll growth could remind investors that a slowdown is not the same thing as a recession.

“For all the recent volatility in financial markets, the US economy remains in a healthy shape going into 2019,” Andrew Hunter, senior US economist at Capital Economics, wrote in a report on Thursday.