Markets were rocked Monday following a speech by Vice President Pence this weekend in which he reiterated a hardline stance on trade against China. On the heels of the speech came a Wall Street Journal report that Apple (AAPL) had cut production figures for all of its just released iPhones. The one-two punch hit Apple (-3.96%) and its chip suppliers, as well as international companies like Caterpillar and Deere which fell 3.06% and 3.58% respectively. The Nasdaq was hardest hit finishing off 3.03%, followed by the S&P 500, down 1.66%, and the DJIA off 1.56%. The continued flip between hot and conciliatory rhetoric in the trade war appears to be tiring investors. Many had hoped the signing of the U.S.-Mexico-Canada Agreement (USMCA) was a precursor to a relatively quick resolution of the trade war with China, but those hopes are dwindling as the new year approaches. The lingering trade war, combined with predicted interest rate increases, now have analysts projecting a slowdown in GDP at a minimum, and a possible recession in the latter half of 2019.
The TJ Maxx (TJX) family of companies will report earnings Tuesday coming off of an over 5% decline Monday. Analysts are looking for the company to report a strong quarter with earnings up 22%, but fears of an economic slowdown heading into 2019 has hammered retailers over the past week. Joining the retail parade on Tuesday are Target (TGT) and Ross Stores (ROST). Both are expected to report strong quarters as well, though all of the retailers are expected to report increasing labor and freight costs. Other names of note with earnings Tuesday are Medtronic (MDT) and Lowe’s Companies (LOW).
Economic numbers Tuesday include Redbook retail data and housing starts. The housing starts number takes on added significance after the Housing Market Index fell through the floor Monday morning. The index, coming in at 60 versus an expected 68 showed weakness across the geographic board. Wednesday, the last day before Thanksgiving, brings the release of durable goods, jobless claims, consumer sentiment, existing home sales and leading indicators data. Leading indicators are expected to rise .1% in October following a healthy .5% bump in September. Analysts will clearly be focused on the existing home sales number for further clarification of how badly the housing market is fairing.
Deere (DE) reports earnings before the bell Wednesday. The tractor company missed estimates last quarter due to rising costs. Analysts are cautious ahead of this quarter and are worried the agribusiness cycle may have peaked. Sociedad Quimica y Minera (SQM) will release earnings after the bell Wednesday. The Chilean chemicals and mining grew earnings by over 34% last quarter. Also reporting Wednesday are Baozun (BZUN) and AstroNova (ALOT).
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