U.S. equity benchmarks Tuesday were indicated lower after Apple Inc., said late Monday that the viral outbreak in China would hurt its second-quarter results, reigniting fears that the disease may disrupt manufacturing supply chains and have broad implications for the global economy and financial markets.
How are the benchmarks performing?
Futures for the Dow Jones Industrial Average YMH20, -0.45% were off 164 points, or 0.6%, at 29,232, those for the S&P 500 index ESH20, -0.34% were down 16.15 points, or 0.5%, at 3,364.50, while the technology-laden Nasdaq-100 futures NQH20, -0.51% were down 69 points at 9,563.25, a decline of 0.7%.
What’s driving the market?
Apple Inc. AAPL, +0.02% on Monday said it won’t meet its second-quarter financial guidance because the coronavirus outbreak that originated in Hubei province, China last year is affecting its suppliers’ production . “The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” the iPhone maker said in a statement.
Apple said revenue in the current quarter won’t reach its target range of between $63 billion and $67 billion due to the impact of the infectious disease.
The COVID-19 outbreak has sickened more than 72,000 people and claimed more than 1,800 lives thus far.
The diseases has caused China to postpone an annual political conclave in Beijing that had been originally scheduled for early March, and investors and strategists are predicting that the outbreak will dent China’s economy as well as the economy of other nations because of the second-largest economy’s role as a manufacturing hub to much of the world.
Markets in the U.S., which have been primarily focused on corporate earnings and otherwise healthy economic data, have effectively shaken off worries fueled by the disease, but some strategists warn that investors may be too dismissive.
“The situation in China is getting worse and many more major global companies are likely to lower their outlooks’ on the back of the emergency,” wrote David Madden, market analyst at CMC Markets UK in a Tuesday research report.
“China is important in terms of manufacturing, sales as well as supply chains, so the wider negative impact has the potential to be huge, hence why dealers are bearish on stocks,” he wrote.
Looking ahead, investors are watching for a report on manufacturing in the New York area, the Empire State Manufacturing survey for February, due at 8:30 a.m. Eastern Time, and a 10 a.m. report on conditions in the housing market from the National Association of Home Builders.
Which stocks are in focus?
- DuPont Inc. DD, -0.32% said Friday that Chief Executive Marc Doyle and Chief Financial Officer Jeanmarie Desmond are leaving the company, effective immediately.
- Bed Bath & Beyond Inc. stock BBBY, -5.33% rose in Tuesday premarket trading after the home goods retailer announced that it would sell PersonalizationMall.com to 1-800-Flowers.com.
- Walmart WMT, +0.38% reported a rise in fourth-quarter net income as the retailing giant issued guidance that didn’t meet analyst estimates.
- Medtronic’s stock MDT, +0.43% falls after profit beats but sales comes up shy.
- Advance Auto Parts stock AAP, -0.80% rallies after profit beats expectations, but same-store sales comes up shy.
- Fluor FLR, -2.15% says regulators are investigating its accounting, 10-K to be delayed.
- Franklin Resources BEN, +0.62%, the holding company for Franklin Templeton, said it is buying Legg Mason LM, -0.10% for $50 a share.
How are other assets performing?
The price of a barrel of West Texas Intermediate crude for March delivery CLH20, -1.86% traded 1.9% lower at $51.05 a barrel on the New York Mercantile Exchange, after gaining 3% last week.
Gold for April delivery GCJ20, +0.25% rose 0.3% to $1,590.50 an ounce.
The U.S. dollar DXY, +0.29% was up 0.3% higher against a basket of rival currencies at 99.249.
The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, -2.73% shed 4.4 basis points to 1.54% on Tuesday. Bond yields fall when prices rise.
In Asia overnight, the China CSI 300 000300, -0.49% ended 0.5% lower to close at 4.057.51, the Shanghai Composite SHCOMP, +0.05% edged up less than 0.1% at 2,984.97, and the Hang Seng Index HSI, -1.54% closed 1.5% lower at 27,530.20. The Nikkei 225 NIK, -1.40% lost 1.4% to 23,193.80.
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