The Dow fell 221 points, or 0.9%, on Wednesday on mounting concerns about the impact of the US-China trade war. The index had been down by as much as 410 points and even briefly dropped below the 25,000 level before recovering.
The Dow still closed at its weakest point since mid-February. The S&P 500 declined 0.7%, while the Nasdaq lost 0.8%.
Nervous investors continue to flock to the bond market, sending the 10-year Treasury yield to levels unseen since late 2017.
Johnson & Johnson (JNJ) declined 4%, leading the way lower on the Dow, as the company faces a trial in Oklahoma over its role in the opioid crisis.
Abercrombie & Fitch (ANF) plunged 26% after posting dismal results and guidance. Canada Goose (GOOS) tumbled 31% on disappointing sales figures.
ExxonMobil won every vote at Wednesday’s annual shareholder meeting, despite intense pressure from activist investors irked by the oil giant’s climate stance.
However, a crucial proposal calling for Exxon (XOM) to eventually split the CEO and chairman roles received strong support, underscoring unrest among the company’s shareholder base.
Even though Exxon opposed the independent chair resolution, 40.8% of voting shares were cast in favor of the proposal. That’s up slightly from last year and just shy of the majority required.
The proposal was supported by the Church of England’s endowment fund and the New York State pension fund. Those shareholders were upset by the SEC’s decision to block their climate change proposal that would have called on Exxon to establish emissions targets.
Edward Mason, head of responsible investment for the Church Commissioners for England, called the CEO/chairman vote a “warning shot to management” that signals investors’ “profound dissatisfaction.”
Exxon execs insisted the company is taking climate change seriously, including by working on potential technological breakthroughs.
“We don’t believe society has to choose between prosperity or reducing the risk of climate change,” Exxon CEO Darren Woods said. “We can do both, which is what we’re working on.”
Investors are feeling a chill: Canada Goose (GOOS) stock plunged today and is on pace for its worst day since the company went public two years ago.
Earlier today, the maker of $1,000 winter jackets revealed in its earnings report that it slightly missed on sales and warned growth was slowing.
The stock is currently down 28% and is down 19% for the year. Today’s losses wiped away all of its year-to-date gains.
What’s worse than a trade war? A trade war that comes at a bad time for the market.
The economy could take a turn for the worse if the United States isn’t careful, said David Kelly of JPMorgan on CNN Business’ Markets Now live show today.
Kelly noted that the economic expansion is a decade in the making, as is the stock market bull run. The economy is fragile.
“I think the economy can get derailed for a little while because this trade war is more damaging for the rest of the world than the United States,” he said. “This is a very old expansion. It needs to be treated with tender love and care. This will have negative effects over the long term.”
Kelly said the stock market will still go up, but investors will get annual gains of 5% not 10% a year as they’ve become accustomed to over the past decade.
“People will have to adjust their expectations,” he said.
But don’t get out of the market: Kelly believes the low interest rate environment is going to persist for a very long time. That makes it hard to get out of stocks.
So where should you put your money? Not in the United States.
“The biggest mistake people are making is people are getting out of international,” Kelly says. “We see a slowdown in population growth. It isn’t going to sustain 3% growth. It doesn’t have the growth prospects EM has.”
Near-term Treasury yields are higher than longer-term yields. That’s a bad omen for the economy.
“Banks lend based off that yield curve. They lend at the short end and make money at the long end. If you take away that incentive, they won’t lend money and the economy freezes,” explained Keith Bliss, head of investment at Cuttone & Co., on CNN Business’ Markets Now live show today.
But Bliss said investors shouldn’t freak out. Credit hasn’t yet tightened. And political winds are in the market’s favor
That’s why Bliss believes the market is vastly oversold now. The Dow is down more than 300 points.
Wall Street’s headaches are growing. The US-China trade war is getting scary. A recession indicator is flashing red. And oil prices are plunging.
The Dow slumped 350 points, or 1.4%, on Wednesday afternoon. The index was briefly down more than 400 points, sinking below 25,000. The Dow hasn’t closed below that level in four months.
Abercrombie & Fitch’s (ANF) stock is having a bruising day on Wall Street following its earnings.
It’s currently down 25% and is “on pace for its worst day in nearly two decades,” according to Eikon.
Today’s losses also wiped out the retailer’s year-to-date gains.
Abercrombie & Fitch’s rivals are also on the decline, with American Eagle (AEO) down 5.4%, Gap (GPS) sliding 3.2% and Levi Strauss (LEVI) dipping 3.4%.
Capri Holdings (CPRI) stock sank 10% in early trading after it released a mixed earnings report. The company owns luxury brands Michael Kors, Jimmy Choo and Versace.
In its earnings call earlier, Capri said it’s closing 50 Michael Kors stores this year and warned there could be more.
Michael Kors previously closed 100 stores beginning in 2017 because of slowing sales.
It also cut its outlook because of costs associated with its $2 billion acquisition of Versace.
The US stock market continues to get hit by trade war and economic jitters.
The Dow dropped 200 points, or 0.8% on Wednesday morning. The S&P 500 and Nasdaq declined about 0.7% apiece.
Investors remain worried about plunging Treasury bond yields and how the US-China trade war will slow the global economy and ding corporate profits.
The recent trade escalation has also led to fears that China will retaliate against US tariffs by taking more extreme steps, including placing restrictions on rare-earth exports.
The market slide comes after the Dow dropped 238 points on Tuesday. The S&P 500 has declined more than 5% since closing at a record high on April 30.
Abercrombie & Fitch (ANF) plunged 20% on disappointing earnings and outlook. Canada Goose (GOOS) tumbled 17% on a sales miss. Dick’s Sporting Goods (DKS), however, climbed 2% on strong guidance and upbeat results.
Bed Bath & Beyond (BBBY) is settling a three-month proxy fight with a group of activist investors.
The retailer said on Wednesday that it appointed four new directors to its board in cooperation with the activist funds.
Under pressure, Bed Bath & Beyond has previously appointed five new directors, a new board chair and launched a business transformation committee in recent months. The company’s veteran CEO also stepped down earlier this month.
The proxy fight kicked off in March, when three activist funds built a roughly 5% stake in Bed Bath & Beyond and attempted to replace the company’s entire board of directors and its CEO.
The activist group previously blamed cluttered stores and a confusing pricing strategy for Bed Bath & Beyond’s prolonged slump.
Abercrombie & Fitch (ANF) shares plummeted 25% in early trading after a dismal earnings report, where it reported lower-than-expected sales in stores open more than a year.
The retailer also said it’s shutting down three Abercrombie & Fitch flagship stores and one Hollister store.
Abercrombie & Fitch closures:
Hollister closure:
The closures are part of its plan to “pivot away from large format stores to smaller … brand experiences,” the company said.
Dick’s Sporting Goods (DKS) stock fell 5% in early Wednesday trading, erasing the company’s earlier gains.
Dick’s said that it was “still working through the impact” of the latest round of tariffs on Chinese goods, and that it had not factored the tariffs into its guidance.
“We are closely monitoring the situation and are hopeful that a trade agreement can be reached,” Dick’s CFO Lee Belitsky told analysts on a call Wednesday.
The company also said it plans to open seven new stores this year and relocate three stores.
In March, Dick’s said it will stop selling guns and ammunition at 125 stores where firearm sales have struggled. Last year, the company stopped selling assault-style weapons after the mass shooting at a Parkland, Florida, high school.
Dow futures were down more than 100 points with a little less than two hours to go before the market opens.
Investors are nervous about a few things, including plummeting US Treasury yields and a US-China trade war with no end in sight.
The drop in futures isn’t all that dramatic, but it follows a puzzling, sudden drop in stocks Tuesday afternoon. The Dow was trading about 100 points higher at midday yesterday and the floor suddenly gave way. Stocks finished yesterday more than 200 points lower.
That unnerved investors who hoped for a break after five straight negative weeks for the Dow – the longest streak since 2011.
S&P 500 futures and Nasdaq futures were down about 0.7% and 0.8%, respectively.
Canada Goose (GOOS) shares are falling from the sky — down as much as 22% — after it slightly missed on revenue and issued mixed guidance in its latest quarterly earnings.
It wasn’t all bad for the luxury jacket maker. Its net income for the first three months of 2019 rose 11% compared to the same period a year earlier. Canada Goose said its direct to consumer business is growing.
If its premarket losses are maintained at the open, it will wipe away all of its year-to-date gains.
Despite Uber’s less-than-impressive performance after going public, one analyst remains optimistic on the company.
Wedbush Securities’ Daniel Ives said in a new note that that despite the “negative noise,” he remains positive on Uber (UBER).
“This week marks an important step forward for Dara & his team to prove to the Street that this business model is still in the early days of playing out,” Ives said of Uber’s first earnings report, which comes out Thursday.
Ives admitted that it will be a “long and winding road for Uber” to prove its value, he’s optimistic the company will successfully expand beyond ride-hailing:
Boeing (BA) shares slid 1.4% in premarket trading after the head of a global airline group said the troubled Boeing 737 Max likely won’t return to the air until August.
Alexandre de Juniac, the director general of International Air Transport Association, told reporters that the plane won’t re-enter service for at least another 10 to 12 weeks.
“But it is not our hands,” he added according to Bloomberg. “That is in the hands of regulators.”
He added that airlines, government regulators and Boeing will hold another meeting within the next five to seven weeks to discuss the 737 Max.
ExxonMobil (XOM) is bracing for stiff opposition at Wednesday’s annual shareholder meeting from activists and shareholders upset with the oil giant’s stance on climate change.
All eyes will be on a shareholder proposal that calls for Exxon to install an independent board chair during its next CEO transition. Exxon opposes the shareholder proposal, noting its board comprises entirely independent directors, other than the CEO. However, the proposal has received support from the Church of England’s endowment fund and the New York State pension fund.
Those groups are irked by Exxon’s successful effort to lobby the SEC to block a separate resolution they proposed that would have urged the company to adopt and disclose greenhouse gas emissions targets.
“The transition to the low-carbon economy is the single greatest challenge the company faces,” Edward Mason, head of responsible investment at the Church Commissioners for England, told CNN Business.
The greenhouse gas emissions proposal that was blocked by the SEC was backed by Mason and other investors with a total of $9.5 trillion in assets. That group, known as Climate Action 100+, previously reached agreements with Royal Dutch Shell, Equinor, BP and other oil giants.
Another round of retail earnings is keeping the US-China trade war front of mind for investors.
Retailers including Abercrombie & Fitch (ANF) and Dick’s Sporting Goods (DKS) report earnings from the first three months of the year on Wednesday. Both are expected to post results before the US market open.
DSW parent company Designer Brands (DBI), Gap (GPS) and Costco (COST) will follow suit and report earnings on Thursday.
Major retailers have developed strategies to blunt the impact of tariffs so far. But they’re starting to warn that the trade war is affecting business.
Walmart (WMT), Target (TGT), Home Depot (HD), Kohl’s (KSS) and Macy’s (M) all said that the tariffs have forced them to either alter their financial outlooks, remodel carefully crafted supply chains or consider raising price tags for customers.
US stock futures were pointing lower on Wednesday after a rough start to the week.
Yesterday’s close: The Dow lost almost 240 points, or 0.9%, on Tuesday as trade anxiety continued to weigh on stocks. The S&P 500 dipped 0.8%, and the Nasdaq lost 0.4%.
