Despite the bearish start to the day, the bulls stepped up to the plate early on and managed to eke out a small gain before the closing bell rang … with no real news to upend the effort. When all was said and done, the S&P 500‘s close of 2,081.72 was 0.15% better than Monday’s.
It wasn’t a modestly bullish day for all stocks, though. Tesla Motors Inc (NASDAQ:TSLA), Ericsson (NASDAQ:ERIC) and Apple Inc. (NASDAQ:AAPL) each used a little more than their fair share of red ink. Here’s what happened.
Ericsson (ERIC)
Just one day after it announced an exciting partnership with Cisco Systems, Inc. (NASDAQ:CSCO) that could be worth an additional billion in revenue by 2018, Ericsson shares got the rug pulled out from underneath them on the heels of a lackluster outlook for the wireless networking market.
As of its latest expectations, Ericsson now sees the wireless networking equipment market only growing between 1% and 3% through 2018 … a scale-back from the growth pace of 2% to 4% it had previously expected through 2017. A saturated market is a core cause of the headwind; most carriers are happy with the fourth-generation hardware they largely have in place right now.
In light of the revised outlook, the unconventional partnership between ERIC and CSCO makes a little more sense.
ERIC closed 6% lower on Tuesday.
Apple Inc. (AAPL)
Just for the record, Apple wasn’t among the three worst-performing large-cap stocks today. But, it was in the top 20, and when the well-loved AAPL is a contender for any given day’s “worst three” list, a look is merited.
The prod for the 3% pullback from AAPL: The company may have sold the daylights out of the new iPhone 6s last quarter.
They’re all just best guesses, but based on Credit Suisse’s research of its suppliers, Apple appears to have cut its iPhone 6s component orders by 10%. This translates into lowered unit sales outlook from Credit Suisse in 2016, from 242 million iPhones to 222 million. That, in turn, led Credit Suisse to lower its AAPL earnings outlook for 2016 by 6%.
Credit Suisse was hardly alone with its concern surrounding AAPL, however. BGC Partners’ Colin Gillis opined the iPhone sales trend was “grinding down,” and added, “If you look at what unit sales are going to do in the December quarter, they are going down to the mid-single-digit range.”
Tesla Motors Inc (TSLA)
Last but not least, despite the bullish response to earnings news released last week, Tesla Motors shares have struggled both days of this week so far.
Today’s 4% loss was mostly prompted by a Morgan Stanley report explaining that its TSLA analysts wouldn’t be shocked if the company reported lower vehicle deliveries in the foreseeable future. Although benign on the surface, the fact that Morgan Stanley bothered to send that message at all was interpreted as a sign that the bank’s research arm may see something wrong with TSLA the rest of the market has yet to pick up on.
Tuesday’s dip combined with Monday’s 3% pullback prodded by reports that a rival high-end EV maker was making progress towards a launch means Tesla shares are down 7% for the week, and close to where they were trading before the post-earnings jump.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
