By Mark DeCambre, MarketWatch , Chris Matthews
Apples stock decline weighs on the broader market
U.S. stocks pivoted lower early Wednesday, with the Dow
gathering losses as blue-chip component Apple Inc. was on the brink
of entering bear-market territory, weighing on Wall Street.
How are the benchmarks faring?
The Dow Jones Industrial Average fell 55 points, or 0.2% at 25,
231. If the losses hold, Wednesday would mark the fourth
consecutive loss for blue chips, the longest streak since Aug. 13,
according to FactSet data. The S&P 500 index is down 0.2%, or
4.2 points, to 2,718, as it seeks to avoid five straight down days.
Meanwhile, The Nasdaq Composite Index is falling 21 points, or
0.3%, at 7,180.
On Tuesday, the Dow slid 100.69 points, or 0.4%, to 25,286.49;
the S&P 500 fell 4.04 points, or 0.2%, to 2,722.18; while the
Nasdaq Composite Index edged up 0.1 point to 7,200.87.
What's driving the market?
Casting a pall over market sentiment on Wednesday was a drift
lower by shares of Apple Inc. (AAPL) toward a bear market, defined
as a decline of at least 20% from a recent top. Apple's shares off
1.8% are down about 18.5% since a peak in early October. By dint of
its lofty market value and share price, the iPhone maker has been a
key proxy for investment sentiment and momentum on Wall Street
because the Nasdaq and S&P 500 index are market-capitalization
weighted gauges, while the Dow is a price-weighted index.
Apple's stumbles, amid continued worries about revenues at the
technology behemoth, come as oil's abrupt and sharp price decline
has stabilized, providing some support for assets perceived as
risky.
Meanwhile, in Europe, investors were watching the latest
developments in the Brexit negotiations after Britain and the
European Union on Tuesday hammered out a provisional deal on the
U.K.'s exit from the bloc and are approaching an "endgame," as
Prime Minister Theresa May has described developments.
However, May must secure support for the proposal with her
cabinet to move forward, and the politics around the exit from the
European trade bloc have been fraught.
On the trade front, investors have been dealt conflicting views
from the Trump administration, with National Economic Council
Director Larry Kudlow on CNBC Monday taking issue with comments
(https://www.cnbc.com/video/2018/11/13/watch-cnbcs-full-interview-with-white-house-advisor-larry-kudlow.html)made
by Peter Navarro, Trump's trade adviser, who said: "globalist
billionaires" are ratcheting up pressure on the White House to end
its standoff with China on trade issues.
The public disagreement between the two White House officials
raises questions about the negotiating strategy between China and
the U.S. in testy tariff talks.
Late Tuesday, Bloomberg News
(https://www.bloomberg.com/news/articles/2018-11-14/u-s-said-to-hold-off-on-trump-s-car-tariffs-after-trade-meeting?srnd=premium)
reported that the Trump administration will hold off on imposing
tariffs on auto imports--for now
(https://www.bloomberg.com/news/articles/2018-11-14/u-s-said-to-hold-off-on-trump-s-car-tariffs-after-trade-meeting?srnd=premium).
What were strategists saying?
"We've had three different trading days wrapped into one, even
before the market opened," Larry Benedict, founder of The
Opportunistic Trader (https://opportunistictrader.com/), told
MarketWatch. "Futures were very soft early this morning, but we
rallied along with European stocks," as the start of trade neared,
Benedict said.
"The CPI reading was in line with expectations, maybe a bit
better than expected, and the market took the cue to firm after
those numbers," he said.
"We are by no means out of the woods here," Benedict, however,
warned. "Today looks OK at the open, but its skittish. If this were
a real move higher, volatility wouldn't be near 20--I'd want it to
be closer to 15," he said.
Tom Essaye, founder of the Sevens Report, wrote in a note to
clients that inflation data will be in focus, given the release of
CPI data. The most important inflation gauges have risen throughout
2018, including core CPI, which hit a high in year-over-year growth
in July, making "it somewhat easy to see why the Fed has turned, on
the margin, hawkish," he wrote.
But Wednesday's CPI reading, which reported strong
month-over-month growth, still shows annual growth in prices below
its 2018 peak. These data "set up the potential for either a
looming 'dovish pivot by the Fed in coming months (think early '19)
or a Fed policy mistake," according to Essaye.
"The searing oil price dive continues to echo, whilst
sterling-borne Brexit optimism wavers," wrote Ken Odeluga, market
analyst at City Index, in a Wednesday research note.
Which stocks were in focus?
Shares of Canopy Growth Corp. (WEED.T)tumbled 9.3% at the start
of trade Wednesday, after the Canada-based cannabis company
reported a wider fiscal second-quarter
(http://www.marketwatch.com/story/canopy-growths-stock-falls-after-losses-widen-revenue-misses-expectations-2018-11-14)loss
and revenue that rose less than expected.
Tilray Inc. shares are also down 9.3% early Wednesday, after the
cannabis firm announced
(http://www.marketwatch.com/story/tilray-revenue-doubled-but-losses-widened-ahead-of-legal-pot-sales-in-canada-2018-11-13)
that third-quarter losses widened to 20 cents per share Tuesday
afternoon.
Vapotherm Inc. priced its initial public offering late Tuesday
at $14 a share, the low end of its $14 to $16 price range.
Energy stocks are in focus Wednesday, after a 7% decline in the
price of oil Tuesday helped drag the sector down 2.3%, as measured
by the SPDR Energy Select Sector ETF(XLE). As crude oil stages a
modest relief rally before the start of trade Wednesday, and with
natural gas up more than 7%, energy firms Cabot Oil and (COG)
paired early gains to be down 1.3%, while Apache Corp. (APA) is
gaining 3.5%.
Shares of Kellogg Co. (K) are under pressure before the bell
Wednesday, down 1.8%, following an investor day presentation by
management Tuesday, and J.P. Morgan's downgrading of the stock from
overweight to neutral.
Snap Inc. (SNAP) stock is down 1.9% Wednesday morning, after the
social-media company disclosed on Tuesday
(http://www.marketwatch.com/story/snap-facing-regulatory-scrutiny-over-pre-ipo-disclosures-2018-11-13)
that is has received subpoenas and requests for information from
the Securities and Exchange Commission, as well as the Justice
Department, related to the firm's disclosures to investors in the
run up to its 2017 initial public offering.
Shares of Tencent Holding Ltd. (0700.HK) are rising 4.9% early
Wednesday, after the firm reported 30% profit growth
(http://www.marketwatch.com/story/tencent-earnings-boosted-by-online-ads-payments-2018-11-14)
in the third quarter.
Canada Goose Holdings Inc. (GOOS.T) stock is surging more than
14%, after the luxury apparel firm beat Wall Street expectations
Wednesday morning for second-quarter profit and sales, while
raising its sales growth outlook,
What data and speakers are ahead?
The Labor Department announced Wednesday that the consumer-price
index rose by 0.3%, matching expectations, according to consensus
estimates from analysts polled by MarketWatch. Core CPI, excluding
volatile food and energy prices, rose 0.2%, also matching
expectations.
Randal Quarles, the Fed's vice chairman for supervision, is
scheduled to speak at 9 a.m. He is a voting member of the Federal
Open Market Committee. Later, a Q&A with Jerome Powell is
scheduled for 6 p.m. Eastern, well after the market closes on
Wednesday.
How are other markets trading?
Oil markets are being closely watched Wednesday, after a steep
decline in crude prices weighed on investor sentiment Tuesday.
Crude oil is recouping some of those losses Wednesday, up 1%. Gold
prices and the dollar were virtually unchanged.
Asian stocks were modestly lower
(http://www.marketwatch.com/story/asian-markets-lag-as-oil-stocks-slip-further-2018-11-13)
Wednesday, while European stocks were under pressure, with the
Stoxx Europe 600 falling 0.1%.
(END) Dow Jones Newswires
November 14, 2018 11:36 ET (16:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.