Stocks slide lower on Monday, pushing the Dow Jones Industrial Average back under the 20,000 level, as Wall Street's excitement over President Donald Trump turned to fear amid his controversial immigration ban and plans to clamp down on H-1B skilled worker visas. This, combined with reports any corporate tax reform plan could be delayed until 2018, has soured sentiment in a big way.
The sudden realization that Trump may not be as beneficial to the big business establishment and thus Wall Street is coming at a time of unique vulnerability to Wall Street: Stocks are coming off of one of the quietest four-year runs in market history and the lowest volatility December since 1900. Years of aggressive monetary policy stimulus have kept stock prices inflated.
But now, with Trump looking less friendly to big business and the Federal Reserve itching to aggressively raise interest rates, stocks are looking vulnerable to an overdue downside correction.
In the end, the Dow Jones Industrial Average lost 0.6%, the S&P 500 lost 0.6%, the Nasdaq Composite gave back 0.8% and the Russell 2000 declined 1.3%. The result was the worst one-day loss for the market in 2017.
Energy stocks were among the laggards, down 1.8% as a group, on evidence of rising U.S. shale production, bearish inventory data and doubts about the implementation of that OPEC production freeze agreement.
Chevron Corporation (NYSE: CVX ) fell 1.7% after reporting a top- and bottom-line miss with earnings of 22 cents per share missing estimates by 46 cents despite a 7.7% year-over-year growth in earnings and an aggressive cut in spending. I've recommended the Feb $110 CVX puts to Edge Pro subscribers.
Fitbit Inc (NYSE: FIT ) was slammed for a loss of nearly 16% after lowering guidance that confirms the much-hyped "wearables" revolution was merely hot air. The company announced it sees a fiscal 2017 loss of between 22 and 44 cents per share vs. the 64 cent gain analysts were expecting.
Mizuho analysts lowered their target in light of the collapse in end user demand, market saturation, and weak overseas adoption, all of which suggests declining unit sales and pricing pressure.
Alphabet Inc (NASDAQ: GOOG , NASDAQ: GOOGL ) fell 2.6% to continue its post-earnings selloff after reporting weaker-than-expected earnings of $9.36 per share, 26 cents below estimates despite 22% revenue growth.
Looking ahead, two big headwinds remain: The sure-to-be-disappointing Apple Inc. (NASDAQ: AAPL ) earnings report on Jan. 31 after the close (amid tepid iPhone 7 demand) and the Federal Reserve policy announcement on Feb. 1 (likely to confirm the three quarter-point rate hike forecast from December amid rising inflationary pressure).
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