The S&P 500 and Nasdaq fell on Thursday with Apple leading declines in megacap growth stocks on concerns over China’s iPhone curbs, while weaker-than-expected jobless claims data stoked worries about sticky inflation.

Apple dropped 3.6% on news that China has widened curbs on the use of iPhones by state employees, requiring staff at some central government agencies to stop using their mobile phones at work.

Bloomberg on Thursday reported that China planned to broaden the iPhone ban to state firms and agencies.

Other megacaps Tesla, Nvidia and fell between 1% and 3.4% in early trading.

Shares of Apple suppliers including Skyworks Solutions, Qualcomm and Qorvo also slid between 4% and 5.3%.

The S&P 500 information technology index fell 2.0% while the Philadelphia semiconductor index slipped 2.7%.

Fueling concerns about interest rates staying elevated for longer, a Labor Department report showed the number of Americans filing for unemployment claims stood at 216,000 for the week ended Sept. 2, compared with estimates of 234,000 claims.

“If you’re invested in stocks you want the economy to slow but not collapse, so any strength in the economy is going to lead people to believe that the Fed is going to possibly raise interest rate in September,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

Expectations that the Fed was nearing the end of its rate-hike cycle have been watered down in recent days by stronger-than-expected U.S. economic data.

Wall Street’s main indexes ended lower on Wednesday after a report highlighted robust service-sector activity last month.

Traders’ bets on the Fed leaving interest rates unchanged in September stood at 91%, while their odds for a pause in the November meeting were at 51.7%, down from nearly 59% a week earlier, according to the CME Group’s FedWatch Tool.

Further denting sentiment, data showed China’s exports and imports fell in August, with sagging overseas demand and weak consumer spending hitting businesses in the world’s second-largest economy.

Shares of U.S.-listed Chinese firms including PDD Holdings,, Baidu and Alibaba fell between 3.4% and 4.5%.

Investors await comments from at least six Fed speakers, including policy voting members Philadelphia Fed President Patrick Harker, Vice Chair and New York Fed President John Williams, due to speak later in the day.

At 9:38 a.m. ET, the Dow Jones Industrial Average was up 14.26 points, or 0.04%, at 34,457.45, the S&P 500 was down 26.88 points, or 0.60%, at 4,438.60, and the Nasdaq Composite was down 193.72 points, or 1.40%, at 13,678.75.

Helping keep the Dow afloat, McDonald’s rose nearly 1% after Wells Fargo upgraded the stock to “overweight”.

Automation software firm UiPath added 3.8% on an upbeat annual revenue forecast after it topped estimates for second-quarter results.

Declining issues outnumbered advancers by a 1.79-to-1 ratio on the NYSE and by a 2.41-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 10 new lows, while the Nasdaq recorded 8 new highs and 99 new lows.


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