New York equity index futures pointed lower ahead of Thursday’s opening bell, for a fourth consecutive session, as a strong start to 2019 hit its head this week, with investors seeking new catalysts to drive indices higher.
Amongst these catalysts lies US and China trade negotiations, where most recently, Huawei, the Chinese telecommunications equipment and smartphone maker, sued the US government over a ban of its products that restricts federal agencies from doing business with the Chinese company.
The company claims a law is unconstitutional and has filed a complaint in Texas – This comes after Huawei faced pressure from President Donald Trump’s administration, which claims the company’s equipment could be used for espionage by the Chinese government.
These pre-market developments come after Wednesday’s trading session, where the S&P 500 and Dow Jones Industrial Average notched their sixth drop in seven sessions, as renewed concerns over global growth weighed on investor sentiment, causing hopes that the world’s two largest economies would soon resolve their differences to fade.
Data on Wednesday morning did little to help the mood, with the US private sector adding fewer jobs than expected in February and the country’s trade deficit blowing out in December to its widest in a decade.
The S&P 500 ended -0.61% lower, its biggest one-day drop in a month, while the blue-chip Dow Jones’ -0.51% decline was its worst only since Monday. The Nasdaq Composite saw its value shed -0.57%.
Looking forward, aside from trade developments, investors will likely assess Thursday’s economic releases, with; Weekly Jobless Claims, Non-farm Productivity and Unit Labor Cost data expected to be released, before market open, at 8:30am EST.
Meanwhile, in corporate news, Kroger (KR), Costco Wholesale (COST), American Outdoor Brands (AOBC), Marvell Technology (MRVL), Burlington Stores (BURL), Barnes & Noble (BKS), H&R Block (HRB) and Hovnanian Enterprises (HOV) are amongst the major companies expected to report their latest financials today.
TODAY’S TOP HEADLINES:
China & Technology: China’s Huawei sues the US, claiming it shouldn’t be blocked from selling to federal government. (CNBC)
Huawei is suing the US over a law that bans government agencies from buying the Chinese technology giant’s equipment, claiming the legislation is unconstitutional, as the company goes on the front foot following months of political pressure.
China & Markets: Trump Wants a China Deal and a Stocks Rally. He May Not Get Both. (Bloomberg)
President Donald Trump wants the stock market to celebrate if he strikes a trade deal with China. Investors may struggle to deliver. The outcome is something far less certain than investors have priced in during this year’s equities rally. Instead, the most likely scenario is an accord with few details, or a paucity of specifics on which tariffs will stay and which may go.
ECONOMIC CALENDAR:
Today’s Economical Announcements
08:30AM – ★☆☆ – Weekly Jobless Claims (Previous: 225,000)
08:30AM – ★★☆ – Nonfarm Productivity (QoQ) (Q4) (Previous: 2.2%)
08:30AM – ★★☆ – Unit Labor Costs (QoQ) (Q4) (Previous: 1.2%)
STOCKS IN THE SPOTLIGHT:
Pre-Market Movers & News Related Stocks
American Eagle Outfitters (AEO): [EARNINGS] Reported quarterly profit of 43 cents per share, beating estimates by a penny a share. Revenue fell slightly short of Wall Street forecasts, however and American Eagle forecast weaker-than-expected current-quarter profit as it spends more on marketing and new store openings.
Allergan (AGN): [NEWS] Allergan said a new treatment for depression failed in three late-stage studies, and the drugmaker added that it was deeply disappointed in the results.
Zayo (ZAYO): [NEWS] Starboard Value has built a 4 percent stake in communications infrastructure maker Zayo Group, and sent a letter to Zayo asking it to consider a sale.
Estee Lauder (EL): [UPGRADE] Upgraded to “overweight” from “neutral” at JPMorgan Chase, which said it has increased confidence in the company’s ability to achieve its revenue and earnings goals following its recent Analyst Day.
Constellation Brands (STZ): [RATING] Rated “outperform” in new coverage at Credit Suisse, which points to predictable high-single digit revenue growth as well as an anticipated increase in free cash flow. Credit Suisse’s price target of $230 per share compares to yesterday’s close of $166.06.
Amazon.com (AMZN), JPMorgan Chase (JPM), Berkshire Hathaway (BRK.A): [NEWS] The health-care joint venture between the three companies has been named “Haven,” and a website for the operation has been unveiled.
Five Below (FIVE): [RATING] Oppenheimer initiated coverage of the discount retailer with an “outperform” rating, citing Five Below’s continued ability to thwart unfavorable trends within the retail sector.
General Electric (GE): [NEWS] Has hired an investment bank to explore a possible sale of its stake in a renewable energy joint venture, according to a Reuters report. GE is partners with Italy’s Enel in the venture, and the stake is said to be worth more than $1 billion.
Stanley Black & Decker (SWK): [NEWS] Sued retailer Sears, accusing of breach of contract and trademark infringement over the “Craftsman” brand name. Stanley bought the brand two years ago, and says Sears violated its “limited” license to sell some Craftsman products by advertising that it was “the real home” of Craftsman.
Qualcomm (QCOM): [NEWS] Qualcomm is getting some help from the Defense and Energy departments in its dispute with the Federal Trade Commission (FTC) over smartphone royalties, according to The Wall Street Journal.
MOMENTUM STOCKS:
GAINERS: ANF, ZAYO, CVNA, DLTR
LOSERS: SRPT, NVCR, ARWR, PVTL, SAIL, EAF, X, GMS, ALGN, WBA
TODAY’S IPOs:
ShockWave Medical (SWAV) (Price: 17) (Shares: 5.7M)