Monday Motivation. Stocks were tiptoeing higher to start the week, following Europe's lead, although as always, shadows of trade worries lingered in the background, highlighted by a presidential tweet. In today's Morning Movers we…
•Review the latest tweet tumult;
•Discuss ongoing market worries, and;
•Take a look at Tesla's move upward.
Stocks looked prepared to shake off last week's losses Monday, as all three indexes had their noses pointed higher as the market opened.
Dow Jones Industrial Average futures and the S&P 500 futures were both up 0.4% and Nasdaq Composite futures were 0.3% higher.
Yet as always, it doesn't take long to chip away at the calm and reveal worry. Monday, trade was again the bugaboo, with Apple (AAPL) suppliers tumbling following a weekend tweet from the White House arguing that the tech giant should move production to the U.S. to avoid tariffs.
That's not particularly welcome news, given that tech has been such a weak spot of late. While U.S. stocks are shrugging it off for now (as they have been prone to do when it comes to trade-related worries lately), it's worth noting that emotion continues to creep into the market as jitters remain.
"Trade wars, weakness in tech, and contagion risk from emerging markets offset another week of solid fundamental data," writes Piper Jaffray's Craig Johnson, speaking of last week's move downward for stocks. While the fundamental narrative remains in place, he's concerned that "concerns over trade wars, contagion risk from weakening foreign markets, and a flattening yield curve cannot be ignored," meaning that "September may live up to its bad reputation."
Alas, it seems like only last month that we were toasting new highs for the S&P 500. That's because it was last month : On Aug. 24, the index closed at 2784.69, which, as CFRA's Sam Stovall notes, allowed it to recover all of the 10.2% that it lost during the correction in January and February. Yet the recovery took 197 days, longer than previous bounces, leading yet again to worries about the aging bull market.
Stovall thinks that the S&P 500 can make a run at 3000 by the end of the year, but that the rally may not be the gift that keeps on giving. "We advise investors not to think this accelerated appreciation will continue well into the New Year. Indeed, we project the S&P to trade around 3100 a year from now, implying a sub-standard price increase in the coming 12 months, as the benefits of tax and corporate profit tailwinds subside," he writes.
While that may sound like a downer, what a difference a decade makes. Just about ten years ago, we were staring down the collapse of Lehman Brothers. Yet, as we approach the anniversary, DataTrek's Nicholas Colas writes that while Lehman's collapse may be the only thing we remember, it was hardly an island of trouble.
"The reality about 2008 is that the US was on track to see a recession regardless of what happened with Lehman. Oil prices had doubled from June 2007 to the same month in 2008 and sat at $140/barrel. That's exactly the sort of spike that always drives a US (and usually global) economic slowdown." We may only talk about the financial crisis today, forgetting the rest, but the "truth is that the global economy was already on very shaky ground."
Therefore, today's ongoing strong fundamentals may be overwhelmed by negative headlines, but they're a reminder that we're still in a much better position than many think.
Akamai Technologies (AKAM) is up 2.2% to $76.18 after D.A. Davidson upgraded it to Buy.
Novartis (NVS) is up 1.2% to $82.72 after Bank of America Merrill Lynch upgraded it to Buy.
Snap (SNAP) is down 1.3% to $9.80 after its chief strategy officer resigned.
Tesla (TSLA) is up 3.2% to $271.65 after CEO Elon Musk outlined management changes and said that the company is "about to have the most amazing quarter in our history."
UnitedHealth Group (UNH) is down 0.8% to $266.05 after Citi downgraded it to Neutral.
Write to Teresa Rivas at firstname.lastname@example.org