The daily business briefing: January 3, 2019

1. Apple outlook darkens due to disappointing iPhone sales in China

Apple shares plunged by more than 7 percent in after-hours trading Wednesday after the company lowered its guidance for first-quarter revenue, citing disappointing iPhone revenue in China and President Trump's trade war. In a letter to investors, Apple CEO Tim Cook said the company's quarterly revenue would come in around $84 billion, below its previous estimate of between $89 billion and $93 billion. Cook wrote that the company had "anticipated some challenges in key emerging markets," but did "not foresee the magnitude of the economic deceleration, particularly in greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac, and iPad."

CNBC The Washington Post

2. Tesla shares drop after price-cut announcement

Tesla shares fell by 6 percent on Wednesday after the electric-car maker announced price cuts on all of its vehicles and reported disappointing deliveries of its Model 3. Tesla said the price reductions were necessary to offset lower green tax credits, which fall by half once a company reaches 200,000 sales. The full $7,500 tax credit for Tesla vehicles expired at the end of 2018, so Tesla is reducing prices by $2,000 per vehicle to make up some of the lost credit. "The price cut is what's driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind," said Craig Irwin, an analyst with Roth Capital Partners.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Reuters

3. Stock futures fall after a tumultuous start to 2019

U.S. stock futures fell by more than 1 percent early Thursday, as technology stocks came under pressure following Apple's announcement that it was cutting its outlook due to disappointing iPhone sales in China. The Dow Jones Industrial Average bounced back from a drop of nearly 400 points to close up by 18 points, or 0.08 percent, on Wednesday, the first trading day of the new year. The S&P 500 and Nasdaq Composite also made wide swings before closing with slight gains. President Trump told reporters that the late 2018 dive that resulted in the market's worst year since 2008 was due to a "glitch," and promised that things would turn around once he reaches new trade deals this year. Trump has blamed Federal Reserve interest rate hikes for stock troubles, but many analysts have chalked up the volatility to Trump's trade war with China.

CNBC The Washington Post

4. Nordstrom co-president Blake Nordstrom dies at 58

Nordstrom co-president Blake Nordstrom died unexpectedly on Wednesday. He was 58. The upscale department store chain announced last month that he had been diagnosed with lymphoma, but said the cancer was treatable. Blake Nordstrom had worked at the Seattle-based company for 40 years, and ran the business with his brothers Erik and Peter. The company was started by their great-grandfather, John W. Nordstrom. He opened a shoe store in 1901 and it grew into a national chain of department stores. The family still owns 30 percent of Nordstrom shares, although the company is publicly traded.

The Associated Press

5. GM reaches 200,000 electric-vehicle sales, triggering lower subsidies

General Motors sold 200,000 electric vehicles in the U.S. by the end of 2018, reaching the threshold to start the phasing out of the $7,500 federal tax credit for purchasers, Reuters reported Wednesday, citing a person briefed on the matter. The credit for GM electric-car buyers now will fall to $3,750 in April, then to $1,875 in October. It will remain at that level for six months, and disappear altogether in April 2020. Congress approved the credit and the phase-out in 2009 to help defray the higher cost of EVs compared to similar sized vehicles with conventional internal combustion engines. A congressional report in November said 57,066 buyers claimed $375 million in electric-vehicle tax credits in 2016.

Reuters