By Mark DeCambre, MarketWatch , Chris Matthews
U.S. stock indexes traded mixed Friday, but on track for weekly
losses, as a decline in shares of chip maker Nvidia helped to dent
sentiment in the technology sector.
How did the benchmarks fare?
The Nasdaq Composite Index was down 30 points, or 0.4%, at
7,229, the Dow Jones Industrial Average rose 14 points, or 0.1% to
25,307, while the S&P 500 index was declining 3 points to reach
2,727, a drop of 0.1%.
For the week, the Dow is set to post a loss of 2.6%, the S&P
500 is on track to decline by 1.9%, while the Nasdaq is set to
decline 2.4%.
What drove the market?
Shares of Nvidia Corp. fell sharply after reporting
disappointing quarterly results late Thursday
(http://www.marketwatch.com/story/nvidia-has-a-pascal-problem-and-its-stock-is-plunging-after-earnings-2018-11-15),
contributing to a week filled with negative triggers.
Opinion:'Crypto hangover' has Nvidia staggering into holidays
with a big headache
(http://www.marketwatch.com/story/crypto-hangover-has-nvidia-staggering-into-holidays-with-a-big-headache-2018-11-15)
Meanwhile, investors were closely watching developments in the
U.K., with Prime Minister Theresa May defiantly pledging her
commitment to seeing Britain's exit from out of the European Union,
despite several top-level resignations and growing doubts about her
leadership.
Although the events are playing out about 3,460 miles away from
Wall Street, the dilemma--should it result in a hard Brexit, or no
trade pact for the U.K.--could roil the financial world, some
market participants believe
(http://www.marketwatch.com/story/heres-why-brexit-turmoil-is-a-source-of-worry-for-us-investors-2018-11-15).
On top of that, Brexit drama may compound concerns about slowing
global growth, after the German government announced Wednesday that
its economy contracted in the third quarter for the first time in
three years. That follows on a similar report out of Japan this
week, which also showed the world's third-largest economy
contracting in the third quarter
Uncertainties around tariff spats between the U.S. and China,
however, remain the centerpiece of anxieties for market
participants. Throughout the week, quickly shifting narratives
around progress in negotiations have whipsawed equity
benchmarks.
U.S. Trade Representative Robert Lighthizer's office on Thursday
denied reports that he had told a few people that the next batches
of tariffs have been put on hold, which had been an early driver
for the session's climb.
(http://www.marketwatch.com/story/fed-rate-hikes-are-now-hurting-asset-prices-says-billionaire-investor-ray-dalio-2018-11-15)
What stocks were in focus?
Nvidia shares (NVDA) fell 17%. Nvidia shares had already
declined 22% in the past three months, and the PHLX Semiconductor
Index , a popular product for wagering on semiconductor shares, is
down 4.1% in 2018.
The Nvidia selloff was sparked by a Thursday-evening earnings
release by the company, which showed it missing revenue
expectations for the third quarter and issuing forward guidance
well below expectations. The selling was compounded by Stifel
Nicolaus cutting its price target for the firm from $200 to
$250.
Shares chip maker Advanced Micro Devices Inc. (AMD) also decline
in sympathy.
Nordstrom, Inc.'s stock (JWN) was tumbling 12.7%, after the
retailer reported earnings
(http://www.marketwatch.com/story/nordstrom-stock-down-13-after-mixed-quarterly-earnings-2018-11-15)
for the third quarter well below analysts expectations.
California utilities PG&E Corp. (PCG) and Edison
International(EIX) surged after investors fled these stocks earlier
in the week on concerns that these companies may be held
responsible for the deadly, ongoing wildfires in California.
Investors were soothed by assurances
(http://www.marketwatch.com/story/pge-stock-soars-after-hours-as-puc-chief-says-bankruptcy-unlikely-2018-11-15)
by California State Public Utilities Commission President Michael
Picker, made in an interview with Bloomberg, that the state would
be very reluctant to allow these firms to go bankrupt. PG&E
shares are up 38.8% Friday morning, while Edison International
stock is rising 13.5%.
Applied Materials Inc. (AMAT) stock is in focus, after the
company reported guidance Thursday evening that fell short of Wall
Street's hopes. The stock is down 4.9% Friday.
Shares of Viacom Inc. (VIA) have reversed healthy premarket
gains to trade down 1.2% in early action, following a
Friday-morning earnings report that showed the media giant beating
earnings and sales expectations for the fiscal fourth quarter.
What are strategists saying?
"Usually the upcoming holiday season is a great time for the
markets, earnings have been strong, and we can still expect to see
the lingering effects of tax cuts in the next couple of quarters,"
Michael Arone, chief investment strategist with State Street Global
Advisors told MarketWatch.
That we're still seeing such volatility is a testament to how
concerned investors are about slowing growth in tech companies that
have provided market leadership for so long, U.S. China trade
relations, rising interest rates, and the effects on both the
global economy and U.S. multinational companies of a stronger
dollar, Arone said.
Expect the tech sector to have a bad end to the week after
dismal Nvidia earnings, Joel Kulina, analyst at Wedbush Securities,
wrote in a note to clients.
"Tech sentiment remains very fragile, and rightfully so, given
deteriorating trends across multiple end markets, and it's becoming
increasingly clear that many [companies] across tech are
experiencing declining visibility," Kulina wrote, warning that in
the near-term tech investors should stick to the strategy "rallies
are to be sold."
"Theresa May had a disastrous day yesterday, and investors are
still on edge over the political situation in the UK," wrote David
Madden, market analyst at CMC Markets U.K.
What data are in focus?
How are other markets trading?
Asian markets were mixed Friday, with pressure on chip makers
helped drag the Nikkei down 0.6%, while Chinese benchmarks rose
modestly. European stocks are being weighed down by Brexit
concerns, as the Stoxx Europe 600 is down 0.7%, the FTSE 100 down
0.7%, and the DAX has fallen 0.9%.
(END) Dow Jones Newswires
November 16, 2018 10:36 ET (15:36 GMT)
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