Apple, tobacco stocks set to lead Wall Street lower

FAN Editor
A trader works on the floor at the New York Stock Exchange (NYSE) in New York
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 9, 2018. REUTERS/Andrew Kelly

November 12, 2018

By Sruthi Shankar

(Reuters) – U.S. stocks were headed for a lower opening on Monday, as a slide in Apple Inc <AAPL.O> after weak forecasts from two of its suppliers and losses in tobacco companies offset early gains from a rebound in oil prices.

The iPhone maker’s shares fell 2.3 percent in premarket trading after laser sensor maker Lumentum Holdings Inc <LITE.O> slashed its second-quarter forecast, saying a large unnamed customer had materially cut orders, while screen maker Japan Display Inc <6740.T> lowered its full-year outlook on weaker demand from smartphone makers.

The losses pulled down the tech-heavy Nasdaq futures <NQc1> by more than half a percent.

Futures earlier held steady as Brent crude <LCOc1> prices rose 1.51 percent after Saudi Arabia, the world’s largest oil exporter, said it would cut its shipments in December.

That lifted energy stocks, with shares of companies such as ConocoPhillips <COP.N>, Schlumberger NV <SLB.N> and heavyweights Exxon Mobil Corp <XOM.N> and Chevron Corp <CVX.N> among the top gainers on the S&P 500 in premarket trading.

“Oil seems to be causing some jitters right now because they have been volatile,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“It should help energy stocks yes, but whether or not it helps the overall market, that correlation is not clear a whole lot of times.”

Investors are also headed into a week that is heavy on retail earnings.

Reports from a host of major U.S. companies have shown the impact of tariffs and a slowdown in China on corporate profits. Reports from major retailers are expected to show how rising wages are eating into margins.

Wage pressures could increasingly be an issue as earnings-per-share growth for S&P 500 companies is expected to slow to about 9 percent next year following 2018’s tax cut-fueled earnings gains of about 24 percent, according to IBES data from Refinitiv.

At 8:52 a.m. ET, Dow e-minis <1YMc1> were down 59 points, or 0.23 percent. S&P 500 e-minis <ESc1> were down 6 points, or 0.22 percent and Nasdaq 100 e-minis <NQc1> were down 37 points, or 0.53 percent.

Tobacco companies Altria Group Inc <MO.N> fell 4.4 percent and Philip Morris International Inc <PM.N> dropped about 1 percent after the Wall Street Journal reported that the U.S. health regulator is planning to pursue a ban on menthol cigarettes.

Athenahealth Inc <ATHN.O> rose 7.2 percent after private equity firm Veritas Capital and hedge fund Elliott Management agreed to acquire the healthcare software maker for $5.5 billion in cash.

Apptio Inc <APTI.O> soared 52.2 percent after the software company agreed to be bought by private equity firm Vista Equity Partners for $1.94 billion.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

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