US close: Stocks continue declines as Apple drags down tech sector

US stocks finished with some heavy losses on Thursday, as Apple’s move to slash its first-quarter sales guidance and a softer-than-expected manufacturing report spooked investors.

The Dow Jones Industrial Average ended the session down 2.83% at 22,686.22, the S&P 500 was off 2.48% at 2,447.89, and the Nasdaq 100 fell 3.36% to end at 6,147.13.

At the opening bell, the Dow had tumbled more than 550 points as a result of Apple warning investors after the close on Wednesday that its first-quarter revenues would be lower than expected due to weaker sales in China.

The tech giant said it now expects revenues of around $84bn over the three months to 29 December, down from previous guidance of between $89bn and $93bn.

It would mark Apple’s first quarterly year-on-year drop since 2016.

In a letter to shareholders, chief executive Tim Cook highlighted slowing growth in China and trade tensions with the US.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China," Cook said.

The news from Apple only served to exacerbate worries about a slowdown in China, following disappointing Chinese manufacturing figures earlier in the week.

“Tech giant Apple sent alarm bells ringing last night after it cautioned the market that sales figures would disappoint,” said James Hughes, chief market analyst at Axitrader.

“It’s activity both at home and across the Pacific in China that is biting, and the implications of this saw US index futures plummet shortly after the market closed.”

The Japanese yen surged to an eight-month high against the dollar following the Apple warning, breaking through key technical support levels as investors looked for a safe haven trade.

In what was being described as a "flash crash" in currency markets, the yen also rose nearly 8% against the Australian dollar to its best level since 2009, and 10% versus the Turkish lira.

Apple shares were down 9.96% at the close, with the likes of chip manufacturers Advanced Micro Devices and Nvidia also closing 9.45% and 6.04% lower, respectively.

Elsewhere, the shift in power as Democrats assumed their majority in Congress offered little relief to investors either.

"However, a proposal to reopen a number of divisions of the government - which has been closed for almost two weeks following budget deadlock - may be sufficient to provide at least a modest degree of support for stocks, assuming it can succeed," added James Hughes.

In macro news, the number of Americans filing for unemployment benefits rose more than expected last week, according to data released by the Labor Department.

Jobless claims came in at 231,000, up 10,000 from the previous week’s level, which was revised up by 5,000 to 221,000.

Economists had been expecting a level of 220,000.

Meanwhile, the four-week moving average came in at 218,750, down 500 from the previous week's average, which was revised up by 1,250 from 218,000.

Also on the jobs front, private sector employment in the US grew much more than expected in December, according to the latest figures from ADP.

Employers added 271,000 jobs last month compared to a 179,000 gain in November, beating expectations for a 178,000 increase and marking the biggest increase in nearly two years.

Small businesses with fewer than 50 employees added 89,000 jobs, while medium-sized businesses with between 50 and 499 members of staff added 129,000 and large businesses of 500 employees or more created 54,000 jobs.

In other news, the Institute of Supply Management's manufacturing sector Purchasing Managers' Index dropped from last month's level of 59.3 to 54.1, missing forecasts for a fall to 54.1 by a wide margin.

Significantly, the sub-index for companies' new orders plummeted from a reading of 62.1 to 51.1.

On the energy side of things, US oil prices reversed losses from earlier in the session as West Texas Intermediate was trading 0.77% higher at $46.90 per barrel, while Brent crude continued its gains to rise 1.19% to $55.57.