Morgan Stanley bearish on S&P 500
Morgan Stanley chief equity strategist Michael Wilson’s year-end target for the S&P 500 (SPY) is among the most bearish on Wall Street. His target is 2,750, which implies a downside of 2% from the index’s current level. Only Barclays has a similar target—the average target, as compiled by CNBC, is 2,950.
He believed stocks (VTI) (DIA) will continue to struggle this year. According to CNBC, Wilson wrote, “After a roller coaster ride in 2018 driven by tighter financial conditions and peaking growth, we expect another range-bound year driven by disappointing earnings and a Fed that pauses.”
Morgan Stanley on the yield curve and growth concerns
As reported by CNBC, Wilson said, “An inverted curve has implications for stocks, particularly given the fact we are now full on valuation.” He added, “In our view, lower rates are only good to a point because eventually the fall in rates is not just about the Fed giving equity investors a ‘green light’ to risk up, but it’s also about slowing growth.”
Slowdown concerns echoed by several companies
Concerns of slowing growth have been echoed by several companies. FedEx (FDX), BMW (BAMXF), and UBS have been warning of a global economic slowdown, particularly in China. US companies Apple (AAPL) and NVIDIA (NVDA) have also warned that China’s (FXI) slowdown is hurting their earnings.
Frontier Communications’ (FTR) revenues have been falling sequentially over the past few quarters.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.