As the Dow Jones Industrial Average and the S&P 500 appear set for lower opens this morning, Morning Movers examines
•...the market's reaction to tariffs; •...why Qualcomm (QCOM) is sinking and Valeant Pharmaceuticals International (VRX) is climbing; •...and the backlash against Amazon.com (AMZN) and Netflix (NFLX) at the Oscars in the View From Silicon Valley.
Are you confused about the impact of potential tariffs on the market? You're not the only one, as the market can't seem to decide if they're a really big deal or just a hiccup on the way to more gains.
Remember, the Dow dropped 420 points last Thursday as tariffs first were seen as a real threat, but the benchmark rallied back from early protectionist-related losses on Friday as the market baked away the edge. This morning, S&P 500 futures have declined 0.3% at 8:51 a.m., while Dow Jones Industrial Average futures have dipped 52 points, or 0.2%. Nasdaq Composite futures have are little changed.
So how worried should we be about the tariffs on steel and aluminum--and the response to them? RBC's Lori Calvasina writes that the down-and-up reaction from the market is a sign that "the jury's still out" on whether the tariffs actually go through. But the very uncertainty applied by that reaction could be a negative if it leads to a sustained period of higher volatility. When the VIX trades at 25 or higher for a period of time, stocks usually "suffer," she says.
And, as I mentioned in my column this weekend, tariffs just add to the concerns that the market now has to deal with. "The timing was unfortunate, as we had already sensed a more somber mood in our investor meetings this week, with rising rates, inflation, and margin pressures in focus," Calvasina says.
Have stocks finally found a wall of worry they can't climb?
Amazon (AMZN) has ticked up 0.3% to $1,504.45 on news that its in talks with JPMorgan (JPM) and other banks to create a checking account product. The discussions are still in preliminary stages, according to people close to the situation, and would focus on younger consumers without bank accounts.
H&R Block (HRB) has risen 1.2% to $25.02 after Northcoast upgraded it to Buy.
Groupon (GRPN) is up 1.6% to $4.34 after Morgan Stanley upgraded it to Equal Weight.
Monster Beverage (MNST) has gained 2.1% to $55.29 after Deutsche Bank upgraded it to Buy. The stock, one of the Barron's Next 50 stocks, turned in a stellar performance last year although it sold off last week following its fourth-quarter earnings.
Qualcomm (QCOM has fallen 1.7% to $63.58 after it requested the U.S. government review Broadcom's (AVGO) takeover offer, meaning a delay in a shareholder vote. Qualcomm and Broadcom have been l ocked in drama about the takeover for some time, as has NXP Semiconductors (NXPI), which Qualcomm wants to buy.
Tractor Supply (TSCO) ticked up 0.4% to $64.50 after MoffetNathanson upgraded it to Buy.
Valeant Pharmaceuticals International (VRX) has climbed 5.1% to $15.64 after getting raised to Buy from Hold at Deutsche Bank.
XL Group (XL) is up 30.7% to $56.61 on news that AXA Group (AXAHY) will buy the insurer for $57.60 a share, in a $15.3 billion deal.
Most of the world's attention was on the 90th Academy Awards last night. But in the days leading up to the ceremony, Netflix (NFLX) and Amazon.com (AMZN) were on Hollywood's minds.
Both tech giants have emerged as major forces in movies and television - Netflix had eight Oscar nominations, four for Mudbound and the rest for documentary and foreign film categories - and for their profligate spending on content, and unconventional distribution strategies.
"(Netflix Chief Executive Officer Reed) Hastings and (Amazon CEO Jeff) Bezos are the new studio chiefs, the new kings," Scott Galloway, author of The Four: The Hidden DNA of Amazon, Apple, Facebook and Google told the New York Times.
This year, Netflix will spend $8 billion on content - up roughly $1 billion from 2017 -- and Amazon $5 billion. "We believe Netflix has a long runway of growth and opportunity… and first mover advantage despite intense competition from larger media players (Disney), pure play competitors, and new potential entrants (Apple)," Daniel Ives, head of technology research at GBH Insights said in a note Sunday.
What particularly riles filmmakers and theater owners is that Netflix releases its original films in theaters for a few days to qualify for awards before releasing them online, undercutting ticket sales and the movie-going experience, critics charge.
The animus was on vivid display in an online post by Academy member Peter Bart, who said he planned to vote against Netflix's nominees. "Do I want a Netflix project to win an Oscar? My answer: not really. Sure, Netflix has proved it can muscle into any domain it wishes to, but I don't want it to muscle into the Oscars," Bart wrote. "I want to keep theaters around. Also the movie-going experience. And I don't want to see Netflix's streaming universe get rewarded with Oscars based on a symbolic one-week theater opening."
Last night, Netflix won an Oscar statuette for the documentary Icarus. - Jon Swartz