Market Preview: Markets Slammed on Trade and Slowing Growth Fears


Markets were closed Wednesday to honor President George H.W. Bush, but that didn’t stop investors from dropping stocks like hot potatoes on Tuesday. Markets came under massive selling pressure after it became clear that the reported trade deal with China isn’t quite as done as investors believed on Monday. Markets fell across the board with all the major indices trading down over 3%, and the Nasdaq again taking the brunt of the selling, fell 3.8%. Investors fear the tariff war will not be resolved as many had believed just Monday, and that the combination of global economic slowing, with the trade war, will pull markets lower in 2019. While the futures markets are up as of Wednesday afternoon, the market has been demonstrating a classic bear trading pattern for several weeks. Strong openings are often sold into, resulting in slow declines throughout the day.

Thursday Broadcom (AVGO), Kroger (KR) and Ulta Beauty (ULTA) report earnings. Broadcom has been inching higher since the October selloff, but was battered in the Tuesday market swoon, down over 4%. Monday, the company announced a partnership with HCL Technologies  (HCTHY) as Broadcom’s preferred training and professional services partner which analysts will be anxious to hear about on the earnings call. Ulta has disappointed investors the past few quarters as the company has reported falling sales and profitability. Analysts are looking for a more positive report from the company on Thursday, and are hoping operating margins have ticked up after challenging inventory and remodeling costs last quarter.

With markets and the federal government closed Wednesday, Thursday brings a full slate of economic numbers. Scheduled for release is the Challenger job cuts report, ADP employment report, jobless claims, productivity and costs, the PMI services numbers, factory orders, and the ISM non-manufacturing index. Analysts are expecting the addition of 175,000 new jobs and jobless claims to come in at 225,000, a slight downtick after the number has been rising the past few months. The PMI services index is expected to decrease slightly to 54.4 from an October reading of 54.8. Friday investors can pour over the employment situation numbers, consumer sentiment, and wholesale trade numbers.

 

Big Lots (BIG), Johnson Outdoors (JOUT) and Vail Resorts (MTN) close out earnings for the first week of December on Friday. Big Lots stock has been in negative territory almost all of 2018, with it’s one positive being that it did not fall much further in the recent market tumble starting in October. The discount retailer is in the middle of a store remodeling plan that will see approximately 200 of its stores receiving a facelift through 2019. Vail resorts should be off to a strong winter season as favorable weather patterns should boost early season sales. The stock is up nicely in 2018, even after a pullback in the recent market selloff. Analysts will be looking for an update on season pass sales as the company has been focusing more firepower on selling customers a season long experience as opposed to one-off ski weekends.  

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