Chip stocks are dropping on growing fears of a trade war
Futures on the Dow Jones Industrial Average (DJI) are signaling a roughly 350-point slide, after President Donald Trump continued to escalate trade war tensions with China, offering up yet another threat. Specifically, Trump threatened to implement a 10% tariff on $200 billion worth of China-made goods. Against this backdrop, futures on the Nasdaq-100 Index (NDX) are also set for a triple-digit drop, with trade-war concerns weighing heavy on chip and technology stocks.
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5 Things You Need to Know Today
- The Chicago Board Options Exchange (CBOE) saw 1.01 million call contracts traded on Monday, compared to 545,529 put contracts. The single-session equity put/call ratio fell to 0.54, while the 21-day moving average remained at 0.57.
- Deutsche Bank upgraded Verizon Communications Inc. (NYSE:VZ) to "buy" from "hold," saying that while fundamentals have improved, the Dow stock's price action has not. The brokerage firm maintained its $56 price target, representing expected upside of 18% to last night's close at $47.46. On the charts, VZ stock has been chopping between its $200 billion market cap and negative 10% year-to-date return level since February.
- Tesla Inc (NASDAQ:TSLA) CEO Elon Musk sent a staff email accusing an employee of "extensive and damaging sabotage." Musk reportedly learned about the alleged behavior over the weekend, which reportedly includes sending sensitive data to outside parties, but failed to name the person involved. TSLA stock is down 1.3% in electronic trading, and could be on track to snap its seven-day winning streak -- its longest since March 2016.
- Amazon.com, Inc. (NASDAQ:AMZN) said it has teamed up with Marriott International (NASDAQ:MAR) to provide a special version of Alexa to guests staying in hotels. In response, AMZN is 1% lower in pre-market trading, but is still fresh off yesterday's record high of $1,726.74, and up 75% year-over-year.
- Today marks the release of housing starts, and St. Louis Fed President James Bullard will speak in the morning. FedEx (FDX), La-Z Boy (LZB) and Oracle (ORCL) are scheduled to report earnings.
Asian Markets Fall Amid Trade Tensions
Asian stock markets got crushed amid the latest trade-related headlines. Chinese stocks suffered some of the sharpest losses, with exports -- namely Apple suppliers -- taking the brunt of the selling action. The Shanghai Composite ended the session down 3.8% and near two-year lows, while the Hang Seng shed 2.8% in Hong Kong. Investors there also digested news that smartphone maker Xiaomi has postponed an initial public offering in China. Turning to Japan, the Nikkei fell 1.8%, and in South Korea the Kospi closed down 1.5%.
European equities are joining the sell-off. Mining stocks, always sensitive to Sino-related headwinds, are experiencing heavy losses. Another big decliner is British designer Debenhams, due to the company’s full-year profit outlook. At last check, the German DAX and French CAC 40 were down 1.4% and 1.3%, respectively, and London’s FTSE 100 was down 0.6%.