The Dow Jones Industrial Average's winning streak looks set to end as the trade war between the U.S. and China looks set to escalate. In today's Morning Movers, we...
•...wonder if it's possible to pull back from the trade-war brink; •...highlight a report that suggests that Apple (AAPL) could face anti-trust action in Japan; •...review United Continental's (UAL) traffic update.
It's ugly out there this morning. And a list of possible tariffs to be imposed on $200 billion of Chinese goods is to blame.
S&P 500 futures have fallen 0.6%, while Dow Jones Industrial Average futures have slumped 188 points, or 0.8%. Nasdaq Composite futures have dropped 0.7%.
As we noted earlier, the U.S. actually looks good compared to other markets. Asian stocks got crushed, European shares are sliding, and commodities aren't holding up too well either, notes Bleakley Advisory Group's Peter Boockvar. "Not only are global stock markets all down (Shanghai comp in particular lower by 1.8%) but copper is breaking by 3% to the lowest level in a year. Soybean prices are back to a 10 yr low," he writes. " The market was ok with the escalation of the trade battle with the actual implementation of a major round of taxes but now it's bothered with a potential further intensity of this skirmish?"
For a long time, the markets have been operating under the notion that everything is "normal," that the tough trade talk is simply negotiation, that the U.S. economy is strong enough to handle tariffs, that everything will eventually go back to the way it was. At some point, though, it will have to acknowledge that that's just not the case, that there is no going back to the old normal even if the trade war were to suddenly de-escalate. B. Riley FBR's Mark Grant likens what's happening now to A Game of Thrones, with world powers vying against one another, and it doesn't matter at this point what you or I sitting think of the escalation. "President Trump's chair is a throne and he is exercising our sovereignty, quite loudly now, from it," Grant writes. "We are fully engaged with China, without question, and the European Union may join the fray. As a matter of common sense I back-up when'shock and awe' are being exercised. Now, I hear the thunder clearly, and I am backing up."
Maybe it's time we all did.
Earnings & News
Apple (AAPL) is down 0.7% to $188.95 after Reuters reported that it may be facing anti-trust charges in Japan.
Box (BOX) is down 1.8% to $25.71 after announcing its acquisition of Butter.ai, a machine learning-powered search service.
Fastenal (FAST) is up 6.7% to $$52.84 after reporting second-quarter earnings. The tool and supply company earned 74 cents a share on revenue of $1.27 billion. Analysts were looking for earnings of 66 cents a share on revenue of $1.26 billion.
United Continental (UAL) is down 1.5% to $70.23 after the airline reported that revenue passenger miles rose 7.2% and capacity increased 4.2%, on a year-over-year basis. - Teresa Rivas
Upgrades & Downgrades
Hess (HES) is down 2.4% to $67.90 after Barclays downgraded it to Underweight.
Liberty Global (LBTYA) is down 0.7% to $29.10 after Macquarie downgraded it to Neutral.
Motorola Solutions (MSI) is up 0.5% to $119.25 after Cowen & Co. upgraded it to Outperform.
Myriad Genetics (MYGN) is up 4.3% to $39.68 after Morgan Stanley upgraded it to Equal Weight.
Twitter (TWTR) is down 1.4% to $42.95 after Instinet initiated coverage with a Reduce rating. - T.R.
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