Bears are in full form during premarket in the stock market today. What has investors so nervous that the market is gapping down hundreds of points? Several stock market events have helped push prices lower but a few key updates have weighed more heavily than others.
Stock Market Today: Not The Apple Of Investors’ Eyes
Wednesday afternoon Apple (AAPL) came out with an update; and not a good one. The company cut its quarterly revenue forecast for the first time in more than 15 years. This move was prompted by signs of weakness in the economy of the world’s second-largest economy: China. This is according to the iPhone maker’s CEO Tim Cook. This shot a ripple across tech and as a result, tech-heavy ETF’s bared the burden of this blunt selloff including S&P 500 (SPY) and the Invesco (QQQ).
The Apple news comes as investors are dealing with other worries that continue to stem from tariff disputes between the United States and China. Though this isn’t the first time we’re hearing about the liabilities created from a trade war with China, this is the first big bump in the road as it would appear Farmers aren’t the only ones feeling the pain. The trade dispute is starting to hurt some of the U.S.’s biggest and most influential companies, which puts economic expansion at severe risk.
“Apple shares will be in focus today due to disappointing update last night. Last year, the company announced it will no longer state iPhone sales numbers, it will just report the total revenue figure,” said David Madden, market analyst at CMC Markets.
Don’t forget that this also comes after Wednesday’s news China’s manufacturing data showed a more drastic decline than one issued earlier. This represented a drop to the weakest level since February 2016.
Shares of Lumentum Holdings (LITE), Cirrus Logic (CRUS), ASML Holding (ASML), Skyworks (SWKS), Taiwan Semiconductor (TSM) were all trading lower during premarket hours as sympathy from Apple’s decline. In addition, the broader tech stocks also fell. Amazon (AMZN), Netflix (NFLX), Nvidia (NVDA), Micron (MU), Qualcomm (QCOM) and others felt the pain as well.
Oil & Energy Will Be In Focus Once Again
Oil futures retreated in overnight trading as fears arose over additional supply. In the stock market today, investors turned their attention to the latest weekly readings on U.S. inventories. The American Petroleum Institute will release its weekly report on crude stockpiles at 4:30 PM ET and the official government figures are due out Friday with expectations for a draw of 2.3 million barrels.
As of 7:40 AM ET crude futures were higher at $46.70 compared to $45.45 around 3:30 AM ET.
Yes, The Government Is Still Shut Down
The US Government shut down is still going on; if you can believe that. President Trump is dead set on getting his Wall budget approved while Democrats seem hard pressed to avoid the $5B+ tax burden.
Even so, Democrats are making an attempt to strike some sort of deal to get the Government wheels back in motion for its employees. They planned to pass a bill on Thursday that could provide temporary funding for federal services to reactivate.
The bill does not include funding for the Mexican border wall. As we all know, this is likely a necessary condition for U.S. President Donald Trump to accept any plan. Something to note is that Friday, congressional leaders are set to resume talks with POTUS.
A Bearish Ode To Automakers?
Of course, a China trade war/dispute/quarrel or whatever you’d like to refer to it as wouldn’t be complete if it didn’t impact automakers in the stock market today. General Motors Co (GM) reported on Thursday that its U.S. new vehicle sales fell 2.7% in the fourth quarter, with declines across most of its brands; sounds like great news right?
The No. 1 U.S. automaker saw noticeable drops in passenger car models. This comes as American consumers avoid those models in favor of larger, more comfortable vehicles. But what may be more alarming is that GM also drops for some of those more popular larger vehicles as well. General Motors, Ford (F), and Tesla (TSLA) shares were all down during premarket trading on Thursday morning.
Time To Watch Biotech Stocks Again?
Healthcare stocks and Biotech stocks haven’t truly outperformed the current market conditions as of late. With broader markets tumbling, the general “safe haven” that biotech & healthcare have offered investors in the past, didn’t appear to be in motion at the end of 2018. In the stock market today, however, this industry will be in focus after big deal news from Bristol Myers (BMY) and Celgene (CELG).
According to the official press release, “The transaction will create a leading focused specialty biopharma company well positioned to address the needs of patients with cancer, inflammatory and immunologic disease and cardiovascular disease through high-value innovative medicines and leading scientific capabilities. With complementary areas of focus, the combined company will operate with global reach and scale, maintaining the speed and agility that is core to each company’s strategic approach.”
Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction with an equity value of approximately $74 billion. Under the terms of the agreement, Celgene shareholders will receive 1.0 Bristol-Myers Squibb share and $50.00 in cash for each share of Celgene. Celgene shareholders will also receive one tradeable Contingent Value Right for each share of Celgene, which will entitle the holder to receive a payment for the achievement of future regulatory milestones.