Apple iPhone sales fears rock Wall Street

In this file photo taken on October 30, 2018 Apple CEO Tim Cook presents new products, including new Macbook laptops, during a special event at the Brooklyn Academy of Music, Howard Gilman Opera House n New York. Image copyright Getty Images
Image caption Apple chief executive Tim Cook presents the firm’s newest line of products

Apple shares have slumped by more than 4%, dragging down US markets and wiping more than $40bn (£31bn; €35bn) off the tech giant’s market value.

The fall followed a profit warning from one of the firm’s major suppliers, which exacerbated concerns that demand for iPhones is slowing.

It renewed declines that started earlier this month after the firm’s sales forecast disappointed investors.

Apple shares are now down more than 15% since hitting a peak in October.

The company was one of the biggest losers on the Dow, which was down about 1.9% in early afternoon trade in New York.

The wider S&P 500 was down about 1.6%, while the Nasdaq was about 2.5% lower.

Apple’s share price fall came after Lumentum, a US manufacturer of facial recognition technology and Apple supplier, said one of its major customers had reduced its shipments.

As a result, Lumentum downgraded its sales and profit outlook, sending its shares down over 30%.

Lumentum’s warning came shortly after another Apple supplier, Japan Display, also cut its full-year guidance blaming “volatile customer demand”.

Image copyright Getty Images
Image caption Apple has said it will no longer report individual sales of iPhones, iPads and Macs

Apple has insisted that it is optimistic about its Christmas season outlook, attributing the weaker than expected forecast to one-off changes, such as the timing of the release of new phones, and temporary supply chain issues.

It reported a record profit in the most recent quarter, thanks to higher prices and growing income from its services business, which includes services such as the App Store, Apple Pay, Apple Music.

Despite the recent declines, the firm’s shares remain up about 13% since the start of the year.

But analysts have remained sceptical, especially after the firm said it would stop sharing the number of iPhones, iPads and Macs it sells with investors.

They have warned that Apple’s shift to higher prices could also make it especially vulnerable if there is a broader pullback in consumer spending.

Goldman hit

Meanwhile, Goldman Sachs, which has been embroiled in a corruption scandal at Malaysia’s state-backed development fund, also dragged Wall Street indexes lower.

Shares in the investment bank were down more than 6%, after a Malaysian official said the country wanted a refund of the fees Goldman earned for work on bond sales for the 1MDB fund.

A former Goldman executive this month pleaded guilty to US charges that he had participated in a scheme to use some of the money raised in those offerings for bribes.

The US market declines come amid an extended period of volatility on Wall Street, with investors wary due to warnings of a slowdown in global growth, trade tensions and rising interest rates.

US companies are also facing a rising dollar, which hurts sales overseas.

The combination of factors has helped fuel speculation that corporate profits may be at their peak, especially after several companies, including Apple and Amazon, issued weaker than expected sales forecasts for the months ahead.

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