By Sue Chang and Chris Matthews, MarketWatch
Tesla shares slide after Wedbush analyst cuts price target
U.S. stocks retreated Monday, though off session lows, as
souring U.S.-China trade relations continued to weigh on market
sentiment with technology shares taking the brunt of the selling
pressure.
How are major benchmarks faring?
The Dow Jones Industrial Average fell 49 points, or 0.2%, to
25,720, the S&P 500 index declined 10 points, or 0.4%, to
2,849, while the Nasdaq Composite Index retreated dropped 81
points, or 1%, to 7,734.
Technology, real estate and communications-services sectors were
the S&P 500's biggest decliners.
At session lows, the Dow was down 203 points, or 0.8%, the
S&P 500 fell 27 points, or 1%, and the Nasdaq had fallen 137
points, or 1.8%.
What's driving the market?
Sino-U.S. trade tensions continued to escalate, with shares of
chip makers taking it on the chin as U.S. technology companies have
begun to comply with the White House's ban on China's Huawei
Technologies Inc.
Bloomberg News reported Sunday that Xilinx (XLNX)(XLNX) and
other U.S. chip makers, including Intel Corp. (INTC), Qualcomm
Corp. (QCOM) and Broadcom Inc. (AVGO) have frozen the supply of
critical software and hardware components to Huawei. The Wall
Street Journal reported separately that Alphabet Inc.'s
(GOOGL)(GOOGL) Google will cease selling some services for devices
made buy Huawei
(https://www.wsj.com/articles/google-cuts-off-huawei-from-some-smartphone-services-11558342295?mod=hp_lead_pos1),
which relies on Google's Android software to run its
smartphones.
Chances of further trade talks between the U.S. and China
appeared to take a hit over the weekend, after CNBC reported
(https://www.cnbc.com/2019/05/17/us-china-trade-talks-have-stalled-sources.html)
that scheduling for the next round of negotiations is "in flux,"
because neither side appears willing to agree to concessions. The
South China Morning Post also cited several China-based analysts
who argued that China has little incentive
(https://www.scmp.com/news/china/diplomacy/article/3010793/china-no-rush-another-trade-war-talks-trip-us-treasury)
to engage in further talks until U.S. negotiators show willingness
to compromise.
Which data and Fed speakers are in focus?
The Federal Reserve Bank of Chicago's national activity index
plunged to a negative 0.45 in April, down from an upwardly revised
positive 0.05 in March and a negative 0.31 in February. A reading
less than zero indicates below-trend economic growth.
Atlanta Federal Reserve Bank President Raphael Bostic said
Monday morning
(http://www.marketwatch.com/story/atlanta-feds-bostic-says-hes-not-sure-the-direction-of-the-next-interest-rate-move-2019-05-20)
that he wasn't sure whether the central bank would move next to
raise or lower interest rates, while saying he expects growth of
2.25% to 2.5% this year, a slowdown from last year's levels.
Fed Chairman Jerome Powell will give a speech at the Atlanta Fed
conference at 7 p.m.
What are strategists saying?
"At the margin, the global trade situation is deteriorating, and
that increases uncertainty," Willie Delwiche, investment strategist
at R.W. Baird told MarketWatch. "These trade concerns are not going
away, and so the question is does it have a meaningful impact on
consumer and business confidence," he said.
Delwiche also noted that so far measures of confidence remain
elevated, but the longer trade uncertainty remains, the likelier
the odds that it has lasting impact on markets and the economy.
"Market volatility continues to stem from announcements and
interpretations of what is going on in trade disputes between the
US and its trading partners, but principally China," said Jasper
Lawler, head of research at London Capital Group, in a daily
research note.
Which stocks are in focus?
Shares of Sprint Corp. (S) rallied 24% after Federal
Communications Chairman Ajit Pai issued a statement Monday
endorsing its planned merger with T-Mobile US Inc. (TMUS), after
the companies told the commission that they "would take a series of
significant steps if the companies' merger application is
approved," including committing to build out a new 5G telecom that
would cover 90% of rural America within 6 years.
Tesla Inc. (TSLA) shares fell 3.3% after analyst Dan Ives at
Wedbush slashed his price target
(http://www.marketwatch.com/story/teslas-stock-sinks-toward-multi-year-low-after-wedbush-slashed-price-target-again-2019-05-20),
citing "major concerns" about the trajectory of the electric car
maker's growth prospects.
Dow component Intel Corp. (INTC) stock was down 1.8% on concerns
over U.S.-China trade relations.
Shares of money manager Legg Mason Inc. (LM) gained 1.1%
following reports that it is nearing a settlement with Trian Fund
Management LP that would give the activist investor 3 to 4 seats on
the company's board.
Shares of Blue Apron Holdings Inc. (APRN) sank 12% after the
meal-kit preparation company said it is pursing plans for a reverse
stock split
(http://www.marketwatch.com/story/blue-apron-is-pursuing-plans-for-a-reverse-stock-split-2019-05-20).
Ford Motor Co. (F) shed 0.4% after the auto maker began a round
of layoffs Monday that will ultimately result in the elimination of
7,000 salaried positions internationally, or about 10% of its
salaries workforce.
How are other markets trading?
Stocks in Asia closed mostly lower, with Hong Kong's Hang Seng
Index falling 0.6%, while China's Shanghai Composite Index and
Shenzhen Composite index both lost ground. Japan's Nikkei 225 ,
meanwhile rose 0.2%.
European stocks were under pressure, with the Stoxx Europe 600
down 1.1%.
In commodities markets, the price of oil rose, while gold was
edging higher
(http://www.marketwatch.com/story/gold-claws-up-from-two-week-lows-as-dollar-stocks-point-lower-2019-05-20)
and the U.S. dollar softened against its peers.
--Mark DeCambre contributed to this article
(END) Dow Jones Newswires
May 20, 2019 12:45 ET (16:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.