(Reuters) – U.S. stocks fell about 2 percent on Thursday as a key gauge of factory activity suffered its biggest drop in a decade, rattling investors already spooked by a rare profit warning from Apple Inc (AAPL.O).

The iPhone maker’s shares dropped 8.4 percent to $144.73, lowest since July 2017, after the company slashed holiday-quarter revenue forecast for its flagship device, citing slowing sales in China.

Meanwhile, the Institute of Supply Management said its manufacturing index fell to 54.1 in December, its biggest decline since October 2008, falling short of economists’ estimate of 57.9.

Data earlier this week showed slowing factory activity in China and the euro zone, indicating that the ongoing U.S.-China trade dispute was taking a toll on global manufacturing.

“We are seeing markets extrapolate Apple’s news throughout several sectors and equate it to a deceleration in the global economy,” said Christopher Anselmo, director at Nasdaq IR Intelligence in New York City.

“A lot of data in the past few days, including U.S. factory activity is pointing to a global economic slowdown. The data is just giving a magnitude of how broad this slowdown is and which regions it is affecting the most.”

Nine of the 11 major S&P sectors fell, led by the technology index’s .SPLRCT 3.8 percent slide. Within tech, chipmakers, which count both Apple and China as major customers, were hit the hardest. The Philadelphia Semiconductor index .SOX slumped 5 percent.

The trade-sensitive industrials .SPLRCI dropped 2.1 percent, while materials .SPLRCM fell 1.9 percent.

At 12:39 p.m. ET the Dow Jones Industrial Average .DJI was down 460.98 points, or 1.97 percent, at 22,885.26, the S&P 500 .SPX was down 40.69 points, or 1.62 percent, at 2,469.34 and the Nasdaq Composite .IXIC was down 133.67 points, or 2.01 percent, at 6,532.27.

The weak factory data sent investors to the relative safety of U.S. Treasuries and defensive sectors such as real estate .SPLRCR and utilities .SPLRCU.

While the recent selloff has made stocks cheaper, with the S&P 500’s valuation falling to 14 times expected earnings from 18 times a year earlier, earnings estimates have also been cut sharply.

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

“As we head towards the earnings season, investors are getting more and more concerned about how the global economic slowdown and the trade war are impacting U.S. companies,” said Anselmo.

One of the few bright spots was Celgene Corp (CELG.O), which surged 24 percent after Bristol-Myers Squibb Co (BMY.N) offered to buy the drugmaker for about $74 billion in cash and stock. Bristol-Myers fell 13.3 percent.

Earlier, U.S. futures got a short-lived boost from the ADP National Employment Report that showed U.S. private sector jobs rose far more than expected in December.

The more comprehensive nonfarm payroll report on Friday will give a clearer picture of labor market strength.

Declining issues outnumbered advancers for a 1.11-to-1 ratio on the NYSE and a 1.54-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 35 new lows.

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