Nasdaq rises, heads for record close as Apple shares cut losses

0 432

The Nasdaq Composite traded slightly higher on Tuesday as gains from Netflix and Google-parent Alphabet offset a drop in Apple shares.

The tech-heavy index was up 0.2% and was headed for a record close. Netflix rose 2.3% and reached a its highest level since July 2018 while Alphabet gained 0.2% to eke out an all-time high. Tesla also contributed to the gains, rising more than 7%.

But the broader market was under pressure after Apple issued a warning over its quarterly revenue. The Dow Jones Industrial Average was down 141 points, or 0.5%. The S&P 500 slid 0.2%.

Apple cautioned it does not expect to meet its quarterly revenue forecast, citing slowed production and weakened demand in China as a result of the coronavirus outbreak. The most valuable company in the U.S. initially said it expected to report net sales between $63 billion to $67 billion in its fiscal second quarter.

“While this is disappointing, by now we don’t believe it’s surprising, and we still expect the issues to be transitory,” said Chris Caso, an analyst at Raymond James, in a note. “We think almost all of the production and most of the demand is likely to be recaptured once Apple’s manufacturing partners are able to return to full production, and once retail facilities in China return to normal.”

The company has not provided an updated forecast for its fiscal second-quarter. Shares of Apple fell as much as 3.2% but were down 1.9% in afternoon trading.

“In the short-term myopia of market consensus thinking, this downward cycle of first-quarter 2020 EPS estimates will be a short-term headwind,” said Tom Lee, founder and head of research at Fundstrat Global Advisors. “Expect a lot of negative chatter in the next few weeks.”

Apple’s warning sent shares of some suppliers lower. Skyworks Solutions slid 1.9% while Xilinx and Qorvo dropped 0.5% and 2.4%, respectively.

China’s National Health Commission on Tuesday reported an additional 98 deaths nationwide, with 1,886 new cases of the coronavirus. As of Feb. 17, the commission said there had been a total of 72,346 confirmed cases and 1,868 deaths.

Investors on Tuesday sold stocks in favor of traditionally safer assets such as Treasurys and gold. The benchmark 10-year U.S. Treasury yield fell to around 1.55% (yields move inversely to prices). Gold futures for April delivery climbed more than 1% to settle at $1,603.60 per ounce, its highest level since 2013.

“Today’s dosage of economic reality is coming as a wake-up call to global investors who continue to buy into the belief that Chinese authorities have the coronavirus under control,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada, in a note.

The major averages were coming off from a solid week in which they posted record highs. The Dow advanced 1% last week while the S&P 500 gained 1.6%. The Nasdaq, meanwhile, climbed 2.2%.

Leave A Reply

Your email address will not be published.