Wall St. sinks as Apple warning and factory data hint at slowdown

By Stephen Culp

NEW YORK (Reuters) - Wall Street was pummeled on Thursday after a revenue warning from Apple Inc and slowing U.S. factory activity stoked fears of a global economic slowdown.

The magnitude of Apple's holiday quarter revenue shortfall sent shockwaves through the technology sector, which pulled all three major U.S. stock indexes down about 2 percent or more.

S&P Technology companies <.SPLRCT> were down 4.3 percent, and the Philadelphia SE Semiconductor index <.SOX> was 5.3 percent lower.

In a letter to investors on Wednesday after the bell, Apple chief executive Tim Cook said the company had not foreseen the scale of China's economic deceleration, which was exacerbated by U.S.-China trade tensions. The iPhone maker's shares were down 9.2 percent.

A report from the Institute for Supply Management showed U.S. factory activity in December suffered the biggest drop since October 2008, the height of the financial crisis. Its PMI reading, while still in expansion territory, hit its lowest level in more than two years.

"There are enough data points out there that point to the fact that the global economy took a sharp downturn as the year drew to a close," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "Trade and other geopolitical issues are the biggest factors."

Major automakers reported weak U.S. new car sales in December, with Ford Motor Co and General Motors Co reporting sales falling by 8.8 percent and 2.7 percent, respectively. Ford shares edged down 0.3 percent, while GM dropped 3.7 percent.

The Dow Jones Industrial Average fell 522.29 points, or 2.24 percent, to 22,823.95, the S&P 500 lost 46.08 points, or 1.84 percent, to 2,463.95 and the Nasdaq Composite dropped 157.19 points, or 2.36 percent, to 6,508.75.

Of the 11 major sectors in the S&P 500, all but defensive real estate <.SPLRCR> and utilities <.SPLRCU> stocks were in negative territory.

Trade-sensitive industrials weighed heaviest on the Dow, led by Caterpillar Inc , 3M Co and Boeing Co .

With fourth-quarter reporting season set to kick off a few weeks from now, analysts now see S&P 500 companies showing a 15.5 percent growth in profits, lowered from 20.1 percent on Oct. 1.

Following Apple's revenue warning, technology firms are now expected to post earnings growth of 10.7 percent for the fourth quarter, compared with 11.6 percent just a few days earlier.

"(In 2019) we're coming out of the gate with such a different vibe than we had just a year ago, when we were just starting to benefit from corporate tax cuts," Tuz added. "It's a slowdown after a tremendous run."

Bristol-Myers Squibb Co shares dropped 14.6 percent after the drugmaker announced plans to buy rival Celgene Corp for about $74 billion. Celgene shares jumped 21.4 percent on the news.

Shares of U.S. commercial air carriers slid after Delta Air Lines cut its fourth quarter revenue estimate. The S&P 1500 Airlines index <.SPCOMAIR> sank 5.5 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 12 new lows; the Nasdaq Composite recorded 2 new highs and 39 new lows.

(Reporting by Stephen Culp, Editing by Rosalba O'Brien)