Stocks

US STOCKS-Wall St sinks 2 pct on weak factory data, Apple shock

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* Apple sinks on sales forecast cut, blames China

* Factory activity slows more than expected in Dec - ISM

* Technology and trade-sensitive industrials hit the worst

* Celgene soars on Bristol-Myers' $74 bln offer (Changes comment, adds details, updates prices)

By Sruthi Shankar

Jan 3 (Reuters) - Wall Street sank 2 percent on Thursday asweak U.S. factory data and the fallout of a rare sales warningfrom Apple Inc fanned fears of slowing growth and spurred thelatest leg of a selloff that has sent indexes to their lowestsince mid 2017.

Apple's shares AAPL.O slumped 9.2 percent after thecompany slashed its holiday-quarter revenue forecast sayingsales in China slowed more than expected, the first majorwarning with the U.S. earnings season around the corner. urn:newsml:reuters.com:*:nL3N1Z236Y

Meanwhile, Institute of Supply Management data showed U.S.manufacturing activity slowed more than expected in December,with the index of national factory activity dropping to 54.1last month and missing economists' estimate of 57.9.

That comes after data earlier this week showed adeceleration in factory activity in China and the euro zone,indicating the ongoing U.S.-China trade dispute was taking atoll on global manufacturing.

"We are seeing markets extrapolate Apple's news throughoutseveral sectors and equate it to a deceleration in the globaleconomy," said Christopher Anselmo, director at Nasdaq IRIntelligence in New York City.

"A lot of data in the past few days, including U.S. factoryactivity is pointing to a global economic slowdown. The data isjust giving a magnitude of how broad this slowdown is and whichregions it is affecting the most."

Ten of the 11 major S&P sectors fell, led by the technologyindex's .SPLRCT 4.16 percent slide. Within tech, chipmakers,which count both Apple and China as major customers, were hitthe hardest. The Philadelphia Semiconductor index .SOX slumped4.36 percent.

The trade-sensitive industrials .SPLRCI dropped 2.75percent, while materials .SPLRCM fell 2.39 percent and threeother sectors were logging declines of roughly 2 percent.

At 11:01 a.m. ET, the Dow Jones Industrial Average .DJI was down 569.72 points, or 2.44 percent, at 22,776.52, the S&P500 .SPX was down 49.31 points, or 1.96 percent, at 2,460.72and the Nasdaq Composite .IXIC was down 148.41 points, or 2.23percent, at 6,517.53.

The grim reading rocked financial markets, sending investorsto the relative safety of government Treasuries and bond-proxiesstock sectors. Even among them only real estate .SPLRCR gained, while utilities .SPLRCU and consumer staples .SPLRCS nursed slight losses.

While the recent selloff has made stocks cheaper, with theS&P 500's valuation falling to 14 times expected earnings from18 times a year earlier, earnings estimates have also been cutsharply.

Analysts on average expect earnings per share at S&P 500companies to rise nearly 7 percent this year, down from a 10percent forecast at the start of October and far below theirexpectations of 24 percent EPS growth for 2018, according toRefinitiv's IBES.

"As we head towards the earnings season, investors aregetting more and more concerned about how the global economicslowdown and the trade war are impacting U.S. companies," saidAnselmo.

Among the few bright spots was Celgene CorpCELG.O , whichsurged 25.8 percent after Bristol-Myers Squibb CoBMY.N offered to buy the drugmaker for about $74 billion in cash andstock. Bristol-Myers fell 12.5 percent. urn:newsml:reuters.com:*:nL3N1Z32RL

Earlier the market got a short-lived boost from an ADPNational Employment Report that showed U.S. private sector jobsrose far more than expected in December. The more comprehensivenonfarm payroll report on Friday will give a clearer picture oflabor market strength. urn:newsml:reuters.com:*:nZON1YH900

Declining issues outnumbered advancers for a 2.14-to-1 ratioon the NYSE and a 2.54-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 12 new lows,while the Nasdaq recorded one new high and 28 new lows. (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;Editing by Shounak Dasgupta) ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 2238780; outside U.S. +91 80 6749 6328; Reuters Messaging:sruthi.shankar.reuters.com@reuters.net))


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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