Apple’s coronavirus profit downgrade rippled through U.S. stocks with exposure to China on Tuesday.
As the Dow Jones ’second most heavily weighted stock, AAPL put severe pressure on the index.
Dow bulls are still betting on a v-shaped recovery in China’s economy, but Japan and Germany might not be so fortunate.
The Dow Jones fell nearly points on Tuesday as Apple’s coronavirus warning rattled through the US stock market.
Wall Street still appears confident that its domestic economy is sheltered from China, but this optimism may be cracking. The global outlook for growth looks bleaker by the day.
Dow Jones Struggles as Economic Reality Sets In
The Dow Jones Industrial Average was easily the worst performer among the U.S. stock market’s major indices on Tuesday.
The bellwether index rallied off its session lows ahead of the closing bell. But as of 3: (pm ET, the Dow was still down 248. (points or 0.) % to settle at , 150.
The Dow Jones struggled on Tuesday as Apple’s struggles highlighted the coronavirus headwinds facing the global stock market. | Source: Yahoo Finance
The S&P 0 fell. %, while the Nasdaq proved more resilient. The tech-heavy index crept into positive territory thanks to a massive 7% rally in Tesla stock.
There was a note of risk-off in the commodity sector as
the price of gold rallied more than 1 % , and crude oil dipped slightly after recovering from steep early losses.
Three of the World’s Biggest Economies Are Being Devastated by Coronavirus
There’s mounting evidence that the coronavirus outbreak will have a severe impact on the Chinese economy, but Apple’s decision to downgrade its earnings forecast still caught Dow Jones bulls off-guard.
But even more significant for the stock market is the assess shaky global economy.
Japan and Germany, two of the world’s top four nations by GDP, were already struggling before the coronavirus struck, and clearly, China unexpectedly faces major issues itself.
Bill Diviney, a senior economist at ABN AMRO, provided the following take on the worrying storyline playing out both in Asia and Europe:
Q4 GDP data for both Japan and the Eurozone suggest very weak underlying growth dynamics, well before the impact of the coronavirus will be felt.
Given that these economies are the most exposed of the developed world to China, the weakness does not bode well for the global growth outlook – and suggests downside risks to our already low growth expectations for .
The relatively strong performance of the U.S. stock market has hinged on data demonstrating that just 0.5% of its export demand is from China.
Compare this to % from Japan – whose tourism industry relies principally on China -and the fact that 3% of Germany’s entire GDP comes from Chinese car buyers. Auto-demand looks to have all but dried up amid the coronavirus outbreak, as Jaguar Land Rover confirmed today
But that doesn’t mean the U.S. is immune to the coronavirus slowdown.
With iPhone demand and supply both threatened, it was unsurprising to see one of the index’s most heavily weighted stocks struggling, shedding almost 3% at its lows.
It didn’t help that Nikkei reported that some iPhone suppliers are operating at just % of capacity due to the coronavirus outbreak.
Exxon Mobil continues to be the “Dog of the Dow” as the oil giant drops further with the price of crude. It’s down over 1.3% today – and % on the year.
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