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Nov 20, 2018

Markets I WSJ

The Wall Street Journal.
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Markets
Good morning. Amrith Ramkumar here with The Wall Street Journal, setting up the day's trading after another slump for tech stocks yesterday.
U.S. stock futures are dropping as investors parse just-released numbers from Target, Lowe's and Best Buy. We'll also get housing starts data later this morning with some analysts anxious about weakness in that sector of the economy.
And I break down the market's recent success during the week of Thanksgiving and why the tech swoon could halt another positive streak for the S&P 500. 
 

Markets in a Minute

Markets Data
 

Overnight Developments

 

Market's Thanksgiving Week Success Takes a Hit

Stocks slumped Monday as tech weakness and trade tensions linger.
Anxiety about global trade policy and an ongoing rout in technology stocks have put the S&P 500 in danger of ending its six-year streak of Thanksgiving week gains, the latest milestone threatened by recent market turbulence.
The benchmark stock index, which fell 1.7% Monday and is 8.2% below its Sept. 20 record, has climbed every week of Thanksgiving going back to 2012, according to Dow Jones Market Data.
In the past 10 years, the index has averaged a 1.3% advance during Thanksgiving week, and posted a 0.7% climb on average that week going back to 1950. That compares to a 0.2% average climb in an ordinary week.
Internet stocks have driven much of the recent success, with the tech-heavy Nasdaq Composite averaging a 1.3% rise the week of Thanksgiving in the last 20 years. But tech has struggled in recent weeks, illustrating an ongoing tension as  investors debate whether stocks can continue climbing with leadership from other sectors. The Nasdaq dropped 3% Monday, putting it 13% below its August record.
Apple, Amazon.com, Google parent Alphabet, Microsoft, Facebook and Netflix all fell at least 3.3%.
The latest leg lower for U.S. stocks came after a weekend economic summit of world leaders ended in acrimony, the most recent setback for investors hoping that a resolved U.S.-China tariff fight will help markets stabilize late in the year.
Continued trade uncertainty and concern about peaking profit growth have also threatened other stock-market achievements recently. The S&P 500 ended a six-month winning streak last month. The largest technology companies have lost hundreds of billions of dollars in market value, pulling Apple and Amazon well below $1 trillion after the duo became the first U.S. companies to reach the threshold earlier this year.
Many of the market’s leaders from recent years are now in bear markets, defined as a drop of 20% from a recent peak. And even with companies posting their largest profit increases in several years, the S&P 500 is now up just 0.6% in 2018, after climbing in five of the past six years. 
Investors banking on a rebound this week and in December hope upcoming retail earnings or positive trade news could improve that mark in the coming days. History could also provide some solace: The S&P 500 has risen 85% of the time on the Tuesday through Friday of Thanksgiving week since 1950.
—Kenny Jimenez contributed to this article.

Market Facts

  • The Nasdaq has fallen 12.7% this quarter, on track for its largest quarterly drop since September 2011 when it fell 12.9%. If the tech-heavy index falls more than that, it would post its worst quarter since 2008.
     
  • Google parent Alphabet closed in a bear market Monday, joining Facebook, Amazon.com and Netflix down 20% or more from recent peaks. Apple flirted with a bear market for much of the day before closing at $185.86, down 19.9% from its Oct. 3 record. A close at or below $185.65 would end the iPhone maker's bull run that stretches back to May 2016.
     
  • On this day in 1991, Cascade International announced that its chairman, Victor Incendy, had disappeared—along with more than 200 of Cascade’s stores. Incendy had claimed that Cascade had between 255 and 400 outlets, but in reality, there were fewer than 30. At its peak price of $11.62 in August, Cascade’s stock had been valued around $200 million; less than a year later, the disappearing company’s stores were sold off for a mere $370,000. 
  • Key Events

    U.S. housing starts for October, out at 8:30 a.m. ET, are expected to rise to an annual pace of 1.22 million from 1.201 million a month earlier. Permits are expected to rise to 1.27 million from 1.241 million.
     

    Must Reads

    Apple stock fell 4.1% in intraday trading Monday, on track to close in bear-market territory. PHOTO: MARK LENNIHAN/ASSOCIATED PRESS
    Apple stock is flirting with bear-market territory. The iPhone maker came close to finishing the day in a bear market, a worrisome sign for investors questioning whether the U.S. stock rally can regain its footing without leadership from the technology sector.
    Vanguard is ratching up the index-fund price battle. Vanguard Group is lowering the minimum amounts customers need to invest to get cheaper prices on more than three dozen of its index funds.
    Merrill brokers say their pay plan urges customer debt. Some brokers at Merrill Lynch are pushing back against a compensation plan they claim pits them against their clients.
    Energy losses prompted an emotional video to an options firm’s clients. On Friday, the founder of OptionSellers.com, James Cordier, sent an emotional video to clients, apologizing that losses from bad bets on energy prices would likely lead to the demise of his firm.
    Aramco abandoned its plan for massive corporate-bond sales to fund its Sabic deal. The Saudi oil company is concerned about disclosure requirements and the uncertain outlook for oil prices.
    Oil slides further on worries about an oversupply. Global economic growth concerns have spilled into the oil market, and OPEC revised its demand growth outlook.
    John Paulson agreed to buy a stake in an asset manager from HNA. Mr. Paulson’s hedge fund agreed to buy a stake in $238 billion asset manager BrightSphere Investment Group from Chinese conglomerate HNA Group.
     

    What We've Heard on the Street

    “The arrest of Carlos Ghosn does more than bring down one of the titans of the auto industry. It effectively dashes hopes that the Renault-Nissan-Mitsubishi Alliance that he created could be merged into a conventional car company.”
    —Heard on the Street columnist Stephen Wilmot
     

    Stocks to Watch

    Intuit: The accounting and finance software company exceeded quarterly profit expectations and reported a 41% increase of subscribers to its QuickBooks Online service.
    L Brands: Trying to revamp business at its flagship Victoria’s Secret chain, L Brands said it is halving its annual dividend and hiring a Tory Burch executive to lead the lingerie division.
    Urban Outfitters: The retailer said its third-quarter profit rose nearly 72% as all of its segments reported higher net sales.
    Agilent Technologies: The Santa Clara, California-based company reported a larger-than-expected increase in quarterly revenue.
     

    About Us

    This newsletter is written and edited by Amrith Ramkumar (@AmrithRamkumar; amrith.ramkumar@wsj.com) and Jessica Menton (@JessicaMenton; jessica.menton@wsj.com) in New York, and James Willhite (@jimwillhite; james.willhite@wsj.com) in London.
    Source: WSJ

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