Market Analysis

Beyond the Numbers

Continued Drop By Boeing May Lead To Another Lower Open For The Dow
3/12/2019 9:00 AM

The major U.S. index futures are pointing to another mixed opening on Tuesday following the rally seen over the course of the previous session.

A continued decline by Boeing (BA) may weigh on the Dow, with the aerospace giant falling by 3.4 percent in pre-market trading after tumbling by 5.3 percent on Monday.

The continued drop by Boeing comes after Edward Jones downgraded its rating on the company’s stock to Hold from Buy, citing a possible “delay in orders” after the crash of the second of its 737 MAX jets in less than 6 months.

The Dow eventually recovered from the initial move to the downside in the previous session, joining the broader Nasdaq and S&P 500 firmly in positive territory amid a rally by tech stocks.

Stocks moved sharply higher over the course of the trading session on Monday following the notable pullback seen last week. While the major averages all moved to the upside, the Dow underperformed its counterparts due to the steep drop by Boeing.

The major averages finished the session near their best levels of the day. The Dow climbed 200.64 points or 0.8 percent to 25,650.88, while the Nasdaq soared 149.92 points or 2 percent to 7,558.06 and the S&P 500 jumped 40.23 points or 1.5 percent to 2,783.30.

The rally on Wall Street came following the release of a report from the Commerce Department showing an unexpected uptick in U.S. retail sales in January.

The Commerce Department said retail sales rose by 0.2 percent in January after tumbling by a revised 1.6 percent in December.

Economists had expected retail sales to come in unchanged compared to the 1.2 percent slump originally reported for the previous month.

Excluding a steep drop in auto sales, retail sales climbed by 0.9 percent in January after plummeting by a revised 2.1 percent in December.

Ex-auto sales had been expected to increase by 0.3 percent compared to the 1.8 percent plunge originally reported for the previous month.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, also jumped by 1.1 percent in January after plunging by 2.3 percent in December.

A separate Commerce Department reported showed business inventories increased in line with economist estimates in the month of December.

Tobacco stocks moved sharply higher over the course of the trading session, driving the NYSE Arca Tobacco Index up by 3.4 percent. With the spike, the index reached a four-month closing high.

Substantial strength was also visible among oil service stocks, which moved higher along with the price of crude oil. Reflecting the strength in the sector, the Philadelphia Oil Service Index surged up by 2.9 percent.

Technology stocks also saw considerable strength on the day, contributing to the significant advance by the tech-heavy Nasdaq.

Computer hardware and semiconductor stocks turned in some of the tech sector's best performances, with the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index jumping by 2.8 percent and 2.4 percent, respectively.

Steel, biotechnology, transportation and retail stocks also moved notably higher amid broad based buying interest on Wall Street.

Commodity, Currency Markets

Crude oil futures are rising $0.45 to $57.24 barrel after climbing $0.72 to $56.79 a barrel on Monday. Meanwhile, after falling $8.20 to $1,291.10 ounce in the previous session, gold futures are rebounding $7.20 to $1,298.30 an ounce.

On the currency front, the U.S. dollar is trading at 111.15 yen compared to the 111.21 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1280 compared to yesterday’s $1.1245.


Asian stocks closed higher on Tuesday after U.S. retail sales stabilized in January, helping ease concerns over the state of the economy.

Sentiment was also bolstered after British Prime Minister Theresa May won legally binding assurances from the European Union in an updated Brexit deal, just ahead of a vote in the British parliament.

Chinese shares gained ground on trade optimism after media reports suggested that Chinese Vice Premier Liu He held a telephone call with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer on key issues in their trade talks.

The benchmark Shanghai Composite Index jumped 33.31 points or 1.1 percent to 3,060.31, while Hong Kong's Hang Seng Index surged up 417.57 points or 1.5 percent at 28,920.87.

Japanese shares soared, with gains in global equities and continued weakness in the yen helping underpin investor sentiment.

The Nikkei 225 Index ended the day up by 378.60 points or 1.8 percent at 21,503.69, while the broader Topix closed 1.5 percent higher at 1,605.48.

Tech stocks followed their U.S. peers higher, with Tokyo Electron and Sumco rising around 2 percent. TDK Corp. shares jumped 4.6 percent.

Exporters Canon and Panasonic rose around 2 percent. China-related stocks also surged, with Fanuc gaining 2.3 percent and Hitachi Construction Machinery rising 3.9 percent.

Meanwhile, Australian markets finished marginally lower, giving up early gains. The benchmark S&P/ASX 200 Index edged down 5.40 points or 0.1 percent to 6,174.80, while the broader All Ordinaries Index edged down less than a tenth of a percent to 6,260.60.

Gold miners Northern Star, Newcrest and Regis Resources lost 3-4 percent after gold moved further off the key $1,300-per-ounce mark.

On the other hand, mining heavyweights BHP and Rio Tinto rose over 1 percent, and smaller rival Fortescue Metals Group jumped 2.7 percent.

Woodside Petroleum and Santos climbed 1-2 percent after crude oil prices rose more than 1 percent overnight, helped by output cuts led by producer group OPEC.

Intellectual property company IPH rallied 2.8 percent after it made a hostile takeover bid worth A$1.97 per share in cash and stock for Xenith IP Group.

Seoul stocks advanced on expectations that China will implement investor-friendly policies and unveil more stimulus to prop up slowing economic growth.

The benchmark Kospi advanced 19.08 points or 0.9 percent to 2,157.18, marking the biggest single-day gain since February 20th.

Market heavyweight Samsung Electronics climbed 2.3 percent and top chipmaker SK Hynix added 1.7 percent after U.S. stocks rallied overnight, buoyed by technology shares.

Hyundai Motor rallied 3.7 percent after Institutional Shareholder Services recommended that shareholders vote for two Elliott nominees.


European stocks are mixed on Tuesday after U.K. Prime Minister Theresa May and the European Commission President Jean-Claude Juncker agreed to some last minute changes to the Brexit agreement.

With just over two weeks until the United Kingdom is due to leave the European Union, the British Parliament is due to hold a series of votes on Brexit starting today.

While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

Global payment company Adyen NV have moved sharply lower after some minority shareholders reportedly sold about 8 percent of the capital.

Italian luxury goods company Tod's has also shown a notable move to the downside after its 2018 core profit fell 26 percent.

Sanitary technology solutions provider Geberit Group has also declined after its fourth quarter net income dropped 5.6 percent.

On the other hand, Klöckner & Co. has moved sharply higher in Frankfurt after reporting its fiscal year 2018 earnings.

High tech equipment manufacturer Manz has also moved to the upside after publishing preliminary figures for 2018.

In economic news, U.K. GDP grew 0.5 percent month-on-month in January after a 0.4 percent decline in December, official data showed. Economists had expected a 0.2 percent increase.

Industrial production rose 0.6 percent from December, when it fell 0.5 percent. Construction output jumped 2.8 percent, reversing a similar size slump in December.

U.S. Economic Reports

After reporting no change in consumer prices over the past few months, the Labor Department released a report showing a modest increase in U.S. consumer prices in the month of February.

The report said the consumer price index rose by 0.2 percent in February after coming in unchanged for three straight months. The uptick in consumer prices matched economist estimates.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in February after rising by 0.2 percent in January. Economists had expected another 0.2 percent increase in prices.

At 1 pm ET, the Treasury Department is due to announce the results of its auction of $24 billion worth of ten-year notes.

Stocks In Focus

Shares of ADT Inc. (ADT) are moving sharply lower in pre-market trading after the security company reported an unexpected fourth quarter loss and provided disappointing guidance.

F5 Networks (FFIV) may also move to the downside after announcing an agreement to acquire privately held NGINX for approximately $670 million.

Meanwhile, shares of Stitch Fix (SFIX) are seeing substantial pre-market strength after the personal styling company reported better than expected fiscal second quarter results and provided strong guidance.
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