Apple-Heavy ETFs, Semis Funds Crushed After Sales View Slashed

(Bloomberg) -- Exchange-traded funds with hefty exposure to Apple Inc. are getting hit in pre-market trading Thursday after the tech behemoth slashed its revenue outlook for the first time in nearly two decades.

Shares of Apple plunged as much as 9 percent in early trading in New York. The iPhone maker is the third-largest member in the $60 billion Invesco QQQ Trust Series 1 ETF, or QQQ, making up nearly 10 percent of the fund. QQQ fell about 2 percent in pre-market trading and investors traded more than 5.1 million shares of the fund after the market close on Wednesday, nearly double the average post-session trading volume for the past year.

The $1 billion iShares PHLX Semiconductor ETF, or SOXX, holds many semiconductor companies that supply components to Apple, including Skyworks Solutions Inc., which lost 5.7 percent in pre-market trading, and Broadcom Inc., which fell 4.1 percent. Several key suppliers overseas had cut their revenue estimates during the past few months, suggesting something was amiss. Shares of SOXX fell about 2.3 percent pre-market and investors have traded more than 14,000 shares of the fund as of 8:30 a.m., about 10 times the average for the past year.

Apple slashed its second quarter revenue forecast to $84 billion, compared with earlier guidance of $89 billion to $93 billion, citing weaker demand in China. The announcement, made in a letter from chief executive Tim Cook, comes after weeks of signals from inside Apple and its supply chain indicating that it’s struggling to sell the latest iPhones, sales of which make up about two-thirds of its revenue. The company in November announced that it would no longer report iPhone unit sales, which many investors took as an indication that it was bracing for a slowdown.

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