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It’s not the U.S. economy, stupid. It’s China’s.

That new risk has begun rippling across Wall Street as the effects of a sharp slowdown in the world’s No. 2 economy spill beyond its borders and cut into U.S. corporate profits.

How large a threat a slowdown in China’s economic expansion poses could come into sharp relief as Wynn Resorts Ltd., chip makers and other companies that rely on China for growth post quarterly score cards.

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The list of potential victims is growing and is not limited to U.S. companies. General Motors Co has suffered from shrinking Chinese auto sales and Volvo on Friday warned it expects truck demand in China to fall about 13 per cent as the construction industry cools.

“The question investors will be asking is not necessarily what the impact is for the current quarter, but, ‘if China continues to slow, what will the impact be for the rest of 2018 and 2019?’” said Credit Suisse analyst Patrick Palfrey.

McDonald’s Corp., 3M Co., Boeing Co. and Eastman Chemical Co. all depend on China for more than 10 per cent of their revenue, according to Refinitiv estimates, and will report this week.

Wynn Resorts, reporting on Wednesday, earned more than three-quarters of its operating income from Macau hotels and casinos last year, the biggest share for an S&P 500 company, according to Refinitiv. Its Macau operating income jumped nearly 140 per cent in 2017, far outpacing 36 per cent growth at its Las Vegas businesses.

Caterpillar Inc, which reports results on Tuesday, saw its construction machine sales in Asia Pacific surge 43 per cent in the first half of the year, helped by construction and infrastructure demand in China.

In the second quarter, 3M Co’s China and Hong Kong organic local currency sales rose 12 per cent, more than in any other region.

Several S&P 500 microchip companies also hand in reports over the next week, including Texas Instruments Inc and Intel Corp, which depend on China for more than a fifth of their sales.

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China is trying to navigate multiple challenges after a trade war with the United States sparked a blistering sell-off in domestic stock markets and a steep decline in the yuan versus the dollar.

Concerns grew last week after China reported its slowest economic growth since the height of the global financial crisis in the third quarter.

Chinese shares have been volatile, flirting with four-year lows last week. The benchmark blue-chip index surged more than 4 per cent on Monday, its sharpest gain in almost three years, after regulators revealed tax changes and other measures to support the economy and companies.

U.S. companies have been benefiting from a robust domestic economy and deep corporate tax cuts, but a China growth slowdown could hit multinationals that rely heavily on the country for growth.

Chip makers in recent quarters have struggled with oversupply, a problem that could worsen if demand for automobiles in China keeps weakening, or if Trump places tariffs on smartphones, televisions or other Chinese products manufactured with semiconductors.

The Philadelphia Semiconductor Index has fallen 2 per cent this year, with many investors worried it could drop further following its 38 per cent rally in 2017.

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“You’re looking for potential triggers,” said Bernstein chip analyst Stacy Rasgon. “The trade war with China is one.”

Citing weak third-quarter auto sales in China, Morgan Stanley last week cut its price targets for Ford Motor and General Motors, sending Ford’s stock to its lowest level since 2009. Ford is expected to report a decline in quarterly profit on Wednesday.

China accounted for just over half of GM’s vehicle sales during the first half of 2018, and in July the automaker highlighted record quarterly profit from its Chinese operations. GM stock is down about 24 per cent in 2018.

Analysts on average expect a 22 per cent jump in S&P 500 companies’ earnings per share in the September quarter, according to I/B/E/S data from Refinitiv.

But slower earnings increases are expected for 2019, when corporate tax cuts become a year old.

Goldman Sachs said in a report on Friday that it expects S&P 500 earnings per share to grow 7 per cent next year under a “baseline” scenario. But earnings would remain flat if the United States applies 25 per cent tariffs to all China imports, Goldman Sachs said.

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