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End of Day Briefing - Tuesday Feb 18, 2020

S&P 500 closes lower after Apple issues revenue warning
18-Feb-20
Dow -165.89 at 29232.10, Nasdaq +1.57 at 9732.77, S&P -9.87 at 3370.29

[BRIEFING.COM] The S&P 500 declined as much as 0.7% on Tuesday after Apple ($AAPL 319.00, -5.95, -1.8%) provided a revenue warning due to the coronavirus. The market resiliently cut its losses during the afternoon, though, leaving the S&P 500 down 0.3% for the session. 

The Nasdaq Composite (+0.02%) eked out a closing record, while the Dow Jones Industrial Average (-0.6%) and Russell 2000 (-0.2%) still finished lower. 

Apple specifically said it doesn't expect to meet its revenue guidance for the March quarter due to the coronavirus restraining its supply chain and impacting consumer demand in China. The news didn't come as a surprise given similar warnings previously issued by companies, and investors presumably viewed the situation as temporary and China-specific. 

Investors, however, did assume some defensive positioning, evident by the gains in bonds, gold futures ($1590.00, +$19.00, +1.2%), and the CBOE Volatility Index (14.83, +1.15, +8.4%). The resulting decline in Treasury yields undercut the financials sector (-0.9%), while it benefited the utilities sector (+0.8%). 

The 2-yr yield declined two basis points to 1.40%, and the 10-yr yield declined three basis points to 1.56%. The U.S. Dollar Index rose 0.4% to 99.43. WTI crude inched up 0.1% (+$0.05) to $52.10/BBL, recouping its intraday losses.

Microsoft ($MSFT 187.23, +1.88, +1.0%) and Amazon ($AMZN 2155.67, +20.80, +1.0%), which have a combined market cap of nearly $2.5 trillion, helped offset the weakness in Apple with 1% gains of their own. Both stocks extended their yearly gains to 18.7% and 16.6%, respectively, while Apple trimmed its yearly gain to 8.6%. 

Walmart ($WMT 119.63, +1.74, +1.5%) also outperformed despite missing profit estimates. Tesla ($TSLA 858.40, +58.37, +7.3%) resumed its parabolic advance after its price target was raised at Bernstein and Morgan Stanley, although both targets were well below TSLA's closing price.

Reviewing Tuesday's economic data, which included the Empire State Manufacturing Survey and NAHB Housing Market Index:

  • The Empire State Manufacturing Survey for February increased to 12.9 (Briefing.com consensus 6.3) from the prior month's reading of 4.8.
  • The NAHB Housing Market Index for February declined to 74 (Briefing.com consensus 75) from 75 in January.

Looking ahead, investors will receive the Producer Price Index for January, Housing Starts and Building Permits for January and the weekly MBA Mortgage Applications Index on Wednesday.

  • Nasdaq Composite +8.5% YTD
  • S&P 500 +4.3% YTD
  • Dow Jones Industrial Average +2.4% YTD
  • Russell 2000 +0.9% YTD

Market Snapshot

Dow29232.10-165.89(-0.56%)
Nasdaq9732.77+1.57(0.02%)
SP 5003370.29-9.87(-0.29%)
10-yr Note +3/321.561
NYSEAdv 1190 Dec 1685 Vol 916.4 mln
NasdaqAdv 1455 Dec 1758 Vol 2.2 bln

Industry Watch

Strong: Utilities, Communication Services, Consumer Discretionary
Weak: Financials, Energy, Industrials

Moving the Market

-- Apple (AAPL) issued revenue warning for the March quarter due to the coronavirus

-- S&P 500 closed lower, while Nasdaq eked out closing record

-- Investors assumed some defensive positioning: Treasuries, gold, and the VIX all posted gains


Source: (Briefing.com)

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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