Stocks continue to follow Apple shares lower. Utilities and some smaller stocks were mixed but the sheer size of the market cap weightings of Apple, Microsoft and Amazon is enough to punish the indexes. BTS noted that stocks and High yield bonds are back at support levels seen in June and July. BTS also indicated they are not seeing any deterioration in underlying fundamentals. The Dow closed the day down 551 points to 24,465. Trading volume was higher on the day and IBD now has markets in correction again while BTS continues to stay positive.
Retail stocks were mixed on the day as Best Buy and Lowes Home Improvement reported better than expected earnings while Target missed expectations. AAA is expecting record Thanksgiving travel volumes thanks in part to a strong job market and a flush consumer.
Despite economic strength in the US, it seems that fears of higher interest rates and a global economic slowdown are what’s affecting markets the most these days. The global slowdown begins with China but export dependent nations like Germany and Japan are being impacted as well. The slowdown in China is tied to the trade dispute with the US plus other nations that are starting to push back against China’s debt imperialism. In Germany, new fuel emission standards combined with competition from Tesla is affecting the car industry which employs 1 in every 7 workers. The global slowdown is affecting oil prices too because supply is strong and there is a stockpile overhang while demand growth is expected to ease. If the US/China trade issue is resolved, then things could improve but for the time being the pressure on China continues to build and is affecting global markets.
Shares of Boeing were lower over possible issues with the 737 Max flight control system and the Lion Air crash. Airline gurus think the fix, if any, would be easy and that Boeing’s fundamentals are solid. Boeing has roughly 4,000 737 Max jets on back order and today picked up another order for 40 737 Max 8 jets from Jeju Air in South Korea. Boeing is also working on a new venture called SkyGrid which is an air management system for drones and by extension the possible introduction of the autonomous flying taxi!