Market Perspective for November 12, 2018

The S&P 500 Index slipped 1.97 percent on Monday after Apple (AAPL) supplier Lumentum (LITE) reported a major customer had cut back on a recent order. Shares of LITE fell more than 30 percent, while Apple slid nearly 5 percent on speculated involvement before rebounding. Malaysia demanded Goldman Sachs (GS) return all fees associated with the country’s state-owned 1MDB fund. Embezzlement, corruption and fraud charges are swirling around the fund. Wildfires in California hit two utility companies. Shares of PG&E fell nearly 40 percent at the open before rebounding.

The United Kingdom is poised for a hard Brexit after fruitless talks with the European Union. Both sides would like a deal by Wednesday to ensure British parliament approval ahead of the March 2019 deadline. European Union members also want a review period. The euro and pound both slid versus the U.S. dollar. iShares MSCI Eurozone (EZU) fell 2.24 percent on the day.

Tomorrow, the National Federation of Independent Business will release its small business confidence reading for October. The prior month it reached an all-time high. The consumer price index for October will be out. Analysts are looking for 0.3 percent headline and 0.2 percent core. Last week’s producer price index came in at 0.6 percent and well ahead of expectations. October retail sales, weekly jobless claims and industrial production will round out the week.

China will release its lending, money supply, fixed-asset investment and home price data this week. Over the weekend, the People’s Bank of China deleted a sentence about letting the market determine the yuan exchange rate in its quarterly report, a sign that the country is stepping up its defense of the currency. It is the first time the sentence hasn’t appeared since 2013.

Crude oil fell for the 11th straight day on Monday, the longest losing streak on record. It also lost the $60 level for the first time since March. Natural gas extended its rally as colder-than-expected temperatures are anticipated for many parts of the country.

Advance Auto Parts (AAP), Home Depot (HD), Tyson Foods (TSN), Tidewater (TDW), Cisco (CSCO), Netease (NTES), Macy’s (M), Wal-Mart (WMT), Nvidia (NVDA), Applied Materials (AMAT), Nordstrom (JWN) and (WUBA) are among the larger firms reporting earnings this week. Solid earnings and guidance from Nvidia would go a long way for the struggling semiconductor sector.


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