Tuesday November 20th

20-11-2018

Dow set for 350-point drop as Target slides, tech gets hit again

U.S. stock-index futures pointed to a lower open on Tuesday as a decline in Target shares pressured retailers, while the most popular technology stocks fell again. At around 8:51 a.m. ET, Dow Jones Industrial Average futures were down 369 points, pointing to a loss of 350.44 at the open. The Dow fell nearly 400 points in the previous session. S&P 500 and Nasdaq 100 futures pointed to a negative open too. Target fell 11.2 percent in the premarket after reporting weaker-than-expected earnings for the previous quarter. The company also posted lighter-than-forecast same-store sales, which is a key metric for retailers. The decline sent the SPDR S&P Retail ETF (XRT) down 3.3 percent before the bell. Kohl's, L Brands and Macy's — which are also in the XRT — fell 11.2 percent, 9.4 percent and 4.1 percent, respectively. Futures also fell as members of the popular "FAANG" trade — which is made up of Facebook, Amazon, Apple, Netflix and Alphabet — fell further into bear market. Facebook fell 2.9 percent, while Amazon, Apple and Netflix all dropped at least 3 percent. Alphabet's stock dropped 2.4 percent. On Monday, the FAANG members all closed down at least 20 percent from their one-year highs, pressuring the major indexes. "Short term, unexpected weakness in the tech sector could have a significant impact on the global economy, adding to what already looks like a soggier macro environment," said Dario Perkins, managing director of global macro at TS Lombard, in a note. "Additional retrenchment in the FAANGs could also undermine the broader US stock market." Tech aside, investors will be keeping an eye on earnings and data on Tuesday. On the earnings front, Lowe's, Medtronic, Best Buy, Campbell Soup, Hormell Foods, Kohl's Target and TJX Cos. will are set to report before the bell. Meanwhile. Autodesk, Footlocker and BJ's Wholesale are expected to report after the bell. At 8:30 a.m. ET, investors will be watching for U.S. Housing Starts numbers, followed by Philly Fed non-manufacturing data at the same time. The broader Japanese market also declined, with the benchmark Nikkei 225 down 1.09 percent to close at 21,583.12 and the Topix index lower by 0.73 percent to 1,625.67. In South Korea, the Kospi slipped 0.86 percent to close at 2,082.58. The mainland Chinese markets were also lower on the day. The Shanghai composite fell 2.13 percent to close at around 2,645.85 while the Shenzhen composite shed 2.717 percent to 1,378.92. Hong Kong's Hang Seng index declined 1.94 percent in late-afternoon trade. Oil fell on Tuesday, folding under the weight of a broad stock market sell-off that undercut support to prices earlier in the day from expectations that OPEC will introduce new output curbs. Brent crude oil futures, the international benchmark for oil prices, were at $66.37 a barrel at 0752 GMT, down 42 cents, or 0.6 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $56.94 per barrel, 26 cents, or 0.5 percent, below their last settlement. Gold prices were steady on Tuesday, after moving in a tight range in holiday-thinned trading, holding above the 1,220 level as the dollar was pressured by weak U.S. economic data and a clouded interest rate outlook. Spot gold was little changed at $1,224.45 per ounce at 0735 GMT. U.S. gold futures were flat at $1,224.8 per ounce.