Global markets cautiously kicked off the week, setting the bar low for US equities, as European and Asian stocks both traded lower ahead of the commencing Q1 2019 earnings season; while progress towards a trade deal between Washington and Beijing continued to drag.
Following a stellar first quarter for broad market assets, investors are assessing prospects for further gains in equities, as a resolution to US-China trade negotiations seem to draw nearer.
Equities will likely remain reluctant to make further progress without clear signs of a new catalyst, namely; progress in talks between the world’s two biggest economies. In recent developments, Trump’s economic adviser, Larry Kudlow, had said the two sides are “closer and closer” to a deal, adding; top-tier officials would be talking this week.
These pre-market moves come after Friday’s session, where Wall Street advanced after employment data had shown the US economy to have added more jobs than expected in March (196,000, vs 175,000 expected), while Donald Trump heaped further pressure on the Federal Reserve to ease monetary policy.
The positive data had swung the S&P 500 up +0.48% higher, in a broad-based gain, with Energy (+1.76%) and Utilities (+0.94%) leading the way – whose gains helped Wall Street’s benchmark index record its second consecutive weekly rise (SPY, Perf Week: +2.16%), rising for a seventh consecutive day and notching its longest winning streak in 18 months.
Meanwhile, the Dow Jones Industrial Average and Nasdaq Composite both also ended the session positive, +0.14% and +0.5% respectively.
In today’s economic calendar: Factory Order data for February is due to be released at 10am EST.
In this week’s corporate news: JPMorgan Chase (JPM) and Wells Fargo (WFC) are scheduled to kick off earnings season, this Friday.
TODAY’S TOP HEADLINES:
Politics: Trump Ousts DHS Chief as Border Promises Unravel Ahead of 2020. (Bloomberg) Donald Trump’s frustration over his inability to fulfill his signature 2016 campaign promise to curb illegal immigration led him to oust his second homeland security chief, as the president eyes his re-election prospects next year.
Trade & China: Trade Deal Moves Closer as China and the US Plan More Talks. (Bloomberg) President Donald Trump’s top economic adviser says the US and China are “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing”.
ECONOMIC CALENDAR: Today’s Economical Announcements
10:00AM – ★★☆ – Cap Goods Ship Non Def. (MoM) (Previous: 0.0%) 10:00AM – ★★☆ – Factory Orders (MoM) (Feb) (Previous: 0.1%)
STOCKS IN THE SPOTLIGHT: Pre-Market Movers & News Related Stocks
General Electric (GE): [DOWNGRADE] Downgraded to “underweight” from “neutral” by J.P. Morgan Securities analyst Stephen Tusa, who also cut his price target on the stock to $5 per share from $6. Tusa said investors are underestimating the severity of the challenges and underlying risks at GE.
Snap (SNAP): [UPGRADE] Upgraded to “outperform” from “sector perform” at RBC Capital due to several positive factors including evidence that Android platform improvements for the social media service are gaining traction.
Boeing (BA): [NEWS] Said it would cut production of its 737 Max aircraft to 42 per month from 52, as it continues to work to return the aircraft to service following two fatal crashes. In light of that production cut, and the possibility of more delays in restoring service, Bank of America/Merrill Lynch has cut its rating on the stock to “neutral” from “buy.”
Fiat Chrysler (FCAU): [NEWS] The automaker will pay Tesla hundreds of millions of euros to allow Tesla’s electric cars to be counted in its fleet. That move will allow it to avoid fines for violating new, tougher European Union emissions rules.
Wynn Resorts (WYNN): [UPGRADE] Upgraded to “buy” from “hold” at Jefferies, which notes an improved outlook in China and Macau as well as saying that risk related to a Massachusetts license review is more positively skewed.
Procter & Gamble (PG): [UPGRADE] Upgraded to “outperform” from “market perform” at Wells Fargo, which said CEO David Taylor has infused a sense of urgency and responsibility into the consumer products giant that will result in better performance.
Harley-Davidson (HOG): [DOWNGRADE] Downgraded to “market perform” from “outperform” at Wells Fargo, given weakness in the heavyweight motorcycle market, as well as uncertainty surrounding tariffs.
Southwest Airlines (LUV): [DOWNGRADE] Downgraded to “market perform” from “outperform” at Raymond James, which cited risks related to the continuing grounding of Boeing’s 737 Max jets.
Morgan Stanley (MS): [NEWS] Morgan Stanley issued a statement saying it has not been involved in the marketing or execution of any short-selling trades involving Lyft. The firm said any activity involving the ride-hailing firm’s shares has occurred in the normal course of market-making, and that any suggestion that has applied “short pressure” to Lyft is false.
Carlyle Group (CG): [NEWS] The private-equity firm will buy between 30 percent and 40 percent of Spanish energy company Cepsa from majority shareholder Mubadala, the Abu Dhabi state-owned investment arm. The stake is valued at up to $4.8 billion.
Wells Fargo (WFC): [NEWS] The bank was urged by Warren Buffett, its largest shareholder, to look outside of Wall Street for its next chief executive following the resignation of CEO Tim Sloan. Buffett made his comments in an interview with the Financial Times.
GAINERS: MRNA, SGEN, CRC, TGI, WIFI, STZ, IOVA, WYNN, JBL DECLINERS: PLAN