Yesterday, President Trump called the market sell-off that we saw in December a “glitch.” Looking at today’s price action, broader-market indices are deep in the red. The S&P 500 (SPY) is down 1.3% as of 12:15 PM ET. While Trump called the sell-off a “glitch” and said markets are “going to go up once we settle trade issues,” the problems seem much more extensive than the trade spat.
Yesterday, Apple (AAPL) lowered its fiscal 2019 first-quarter revenue guidance. While the company blamed several factors, a slowdown in China’s sales looks the key culprit. Plus, as Apple CEO Tim Cook noted, some Chinese consumers might be boycotting Apple products. To be sure, China’s slowdown looks like the biggest risk for global markets this year. Kevin Hassett, White House Chairman of the Council of Economic Advisers, said in an interview with CNN, “If we have a successful negotiation with China, then Apple’s sales and everybody else’s sales will recover.” But the situation isn’t so simple. See China’s Slowdown: The Knowns and Unknowns for more.
If China’s slowdown fears weren’t enough, today’s US economic data further added to the woes. Both General Motors and Ford reported fewer sales in the fourth quarter of 2018 compared to the corresponding period in 2017. US manufacturing activity (BA)(AMZN) also reiterated slowdown fears and the December ISM manufacturing index fell to 54.1, which is the lowest since November 2016.
While US markets were deep in the red, they seem to be recovering some of their losses. The slowdown fears aren’t new, and markets priced in slower 2019 growth last year. See Why 2019 Could be a Crucial Year for Stock Markets for what could drive markets this year.