Wall Street shows signs of stabilizing; nerves steadied with futures pointing higher, after yet another rout pushed American stocks lower on Monday – In what analysts are dubbing a “Grinch-like December run”.
Statically, equities rally into the year end, in what is known colloquially as the “Santa Rally”; a phenomenon where stocks rise in December as investors are filled with festive cheer and optimism, the S&P 500 averaging a +1.6% gain during the festive month. Occasionally, however, no such rally materializes – and 2018 is shaping up to be one of those years.
Monday’s session recorded a -1.96% decline for the S&P 500, dragging the US stock market deeper into correction territory – with all the sectors ending negative following a brief morning rally.
Leading the declines were; Real Estate (-4.26%), Utilities (-3.22%), Consumer Staples (-2.31%) and Healthcare (-1.99%) sectors.
The Dow Jones and Nasdaq both dropped by a similar margin negative -2.07% and -2.27% respectively.
All three of the main market gauges now positioned more than -10% from their respective peaks.
Overnight in Asia, selling pressure bared weight on stocks in China and Hong Kong as Chinese investors looked to gauge the impact of a slowdown in global economic growth. China’s Shanghai Composite closed the session down -0.8%, Hong Kong’s Hang Seng finished lower by -1.1%, while the Nikkei in Japan ended the day lower-1.8%.
In economic data, investors will likely examine the latest Building Permits and Housing Starts data, expected at 8:30am EST.
In corporate earnings; Darden Restaurants (DRI), FedEx (FDX), Jabil (JBL), Micron (MU), ABM Industries (ABM) and Navistar International (NAV) are all expected to publish their financials today.
TODAY’S TOP HEADLINES:
US, China & Germany: US Steps Up Pressure on Germany Over Huawei Security Concerns. (Bloomberg)
President Donald Trump’s administration is stepping up pressure on Germany over security concerns tied to China’s Huawei Technologies as Chancellor Angela Merkel’s government prepares an auction for ultrafast 5G wireless networks.
China: Xi calls for China to ‘stay the course’: No one is in a position to dictate reform to us. (CNBC)
Chinese President Xi Jinping addressed his nation Tuesday morning in Beijing to commemorate the 40th anniversary of China’s “reform and opening up” and he struck a relatively defiant tone in response to international calls for changes to his country’s economy.
Brexit: Plans to break the current Brexit impasse could land Theresa May in even deeper trouble. (CNBC)
Despite efforts by the Labour party and other political opponents of the government in the House of Commons, it now looks very unlikely that Theresa May, after last week’s postponement, will put her Brexit proposal to a parliamentary vote this side of the New Year.
Today’s Economical Announcements
08:30AM – Building Permits (MoM) (Nov) (Previous: -0.4%)
08:30AM – Building Permits (Nov) (Previous: 1.265M)
08:30AM – Housing Starts (MoM) (Nov) (Previous: 1.5%)
08:30AM – Housing Starts (Nov) (Previous: 1.228M)
08:55AM – Redbook (MoM) (Previous: -0.5%)
08:55AM – Redbook (YoY) (Previous: 6.6%)
04:30PM – API Weekly Crude Oil Stock (Previous: -10.180M)
STOCKS IN THE SPOTLIGHT:
Pre-Market Movers & News Related Stocks
Navistar (NAV): [EARNINGS] Reported quarterly profit of $1.89 per share, beating consensus forecasts by 18 cents a share. Revenue above forecasts.
Boeing (BA): [BUY-BACK] Boeing increased its stock buyback program to $20 billion from $18 billion, and also announced a 20 percent dividend hike to $2.055 per share.
Rent-A-Center (RCII): [NEWS] Terminated a deal to be bought out by private equity firm Vintage Capital Management, after Vintage did not extend a deadline to close the nearly $1.4 billion deal.
Oracle (ORCL): [EARNINGS] Reported adjusted quarterly profit of 80 cents per share, beating forecasts by 2 cents a share. Revenue topped forecasts.
Goldman Sachs (GS): [NEWS] Goldman Sachs ignored warnings signs in dealings with Malaysian investment fund 1MDB, according to The Wall Street Journal.
Darden Restaurants (DRI): [EARNINGS] Earned 92 cents per share for its second quarter, a penny a share above estimates. Revenue below forecasts.
Qualcomm (QCOM): [NEWS] Qualcomm said it believes Apple is violating the terms of a China court order to stop selling iPhones in that country.
CBS (CBS): [NEWS] CBS said it would not pay former chairman and CEO Leslie Moonves a $120 million severance package, after completing an investigation of sexual harassment allegations against Moonves.
FactSet (FDS): [EARNINGS] Beat estimates by 6 cents a share, with adjusted quarterly profit of $2.35 per share. Revenue above forecasts
Johnson & Johnson (JNJ): [BUY-BACK] Announced a $5 billion stock buyback and reaffirmed its full-year 2018 earnings and revenue guidance.
Kroger (KR): [NEWS] Kroger Chief Financial Officer J. Michael Schlotman will retire from the supermarket operator April 3, although he will remain as executive vice president until he retires at the end of 2019.
NCR (NCR): [UPGRADE] Upgraded to “top pick” from “outperform” at RBC Capital Markets, which cites a number of factors including more efficient cost management for the maker of automated teller machines and point-of-sale terminals.
Viacom (VIAB): [NEWS] Judge ruled that CBS and Viacom controlling shareholder Sumner Redstone be placed under court-appointed guardianship due to his difficulties in speaking.
LOSERS: XRX, W, NTNX, WRK, HAIN, JNJ, COST, ENDP