The Dow Jones Industrial Average is sinking this morning as the future of the European Union is suddenly a question again. In today's Morning Movers, we...
•...examine the implications of Italy's bond rout; •...highlight upgrades to Phillips 66 (PSX) and Roku (ROKU); •...and explain why Stratasys (SSY) is down more than 7%.
How do you say, "Oh brother, here we go again" in Italian?
Wall Street was pointing toward a rocky opening Tuesday morning, as the deepening of yet another political crisis in Italy brought back sent global stock markets tumbling and the U.S. dollar zooming higher.
By 9:00 a.m., Dow futures were looking at a 170-point drop and the S&P 500 was off about 0.8%.
This is actually pretty good, following sharp selloffs in Europe and Asia. Milan's FTSE MIB index continued its freefall of recent weeks, dropping another 3% this morning, while the Stoxx Europe 600 was off 1.2%.
Meanwhile, amid the cancellation of the talks between North Korea's Kim and the U.S.'s Trump, Japan's Nikkei 225 is down 0.5%, Korea's KOSPI 0.9%, Hong Kong's Hang Seng 1%, and the Shanghai SSE 0.6%.
Italy looks set for yet more elections in short order after the president appointed a caretaker prime minister, former International Monetary Fund official, Carlo Cottarelli, who lacks significant political support. The president installed Cottarelli after nixing plans for a government by the two populist parties, Five Star and the Northern League, which won the last election.
Italy is the eurozone's third largest economy-after Brexit it will be the third largest in the European Union-and its net national debt is a thumping 116% of its annual gross domestic product. Five Star and the Northern League are both Euroskeptic parties that are highly critical of the European single currency, the euro, and in the last election they shared 50% of the total vote.
The Five Star movement was founded by a professional clown. And, yes, the whole thing is a clown show. Italy has had more than 65 governments since the Second World War.
Italian government bonds plunged Tuesday morning, sending yields - which move in the opposite direction to prices - to their highest levels since 2012. Meanwhile the US dollar is up again as the euro, the pound and other currencies tumble.
Meanwhile George Soros warned in a speech in Paris that "We may be heading into another major financial crisis."
Yes, good times.
Infinera (INFN) is down 4.3% to $9.64 after Jefferies cut it to Underperform.
Novartis (NVS) is down 1.4% to $75.03 after HSBC downgraded it to Hold.
Phillips 66 (PSX) is up 1.2% to $117 after Wells Fargo upgraded it to Outperform.
Roku (ROKU) is up 2.7% to $39.59 after Morgan Stanley upgraded it to Equal Weight.
Stratasys (SSYS) is down 7.3% to $16.52 on news that its CEO is leaving.
Sun Life Financial (SLF) is down 2.2$ to $41.49 after CIBC downgraded it to Neutral.
ZTO Express ( ZTO) is up 15.8% to $22.35 on news that Alibaba Group Holding (BABA), down 0.6% to $198.04 will invest $1.38 billion in the company, via its logistics arm Cainiao, in return for a 10% stake. - Teresa Rivas
Sign up to Review & Preview, a new daily email from Barron's. Every evening we'll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.