The market may have opened the new trading week in the red, but the bulls didn’t let that situation last long. By the time the closing bell rang, the S&P 500 was up 0.65% finishing the day at 2094.34.
It wasn’t a great day for every stock, though. Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX) and Petroleo Brasileiro SA Petrobras (NYSE:PBR, NYSE:PBR.A) closed deep in the red today.
Here’s why.
Apple Inc. (AAPL)
Apple was the subject of a number of headlines on Monday.
A report by market intelligence provider TrendForce suggests that iPhone shipments for the first quarter may have fallen nearly 45% year-over-year. The blame was put on iPhone 6s, as “the model lacks exciting new features.” TrendForce also predicted that the iPhone SE would only ship 15 million units, resulting in an overall forecast to 213 million iPhones shipped in 2016 — that would be a 10% decline year-over-year.
Doubling up on the poor iPhone news was a report over the weekend that the iPhone isn’t expected to live past its fourth birthday.
Apple, in addressing environmental targets for the company, estimated that its iPhone and Apple Watch provide about three years of service; Macs and Apple TVs lead a relatively more robust life at four years. This helped fuel the fire of conspiracy theorists who believe Apple builds its hardware and releases software in a way that ensures little life expectancy and thus more frequent upgrades.
And just when it looked like consumer technology giant Apple might be off the hook with law-enforcement agencies strong-arming the company into unlocking iPhones seized as evidence, the matter has resurfaced again, renewing the threat to the value of AAPL shares.
This time around, the case in question is a drug-based investigation underway in New York. The FBI has appealed to a federal judge after a lower-court judge denied the prosecutor’s request to force Apple to circumvent an iPhone 5’s security measures.
Apple was fighting the argument levied in the higher court as of Friday, and continued to protest through today. With a Manhattan district attorney proposing clear-cut legislation to require a back door for law enforcement to enter through in such investigations. Lawmakers appear intent on forcing Apple to comply, one way or another, sooner or later.
AAPL ended the day down 2%, and is now down more than 4% for the past two days now that the sanctity of an iOS device is back in jeopardy.
Netflix, Inc. (NFLX)
Netflix didn’t do anything wrong to merit today’s 2.8% pullback. Yet, the big dip NFLX dished out does make sense. How so? Rival Amazon.com, Inc. (NASDAQ:AMZN) — which had only posed a half-hearted threat to NFLX through yesterday — is now taking dead aim at the iconic on-demand video service.
Long story made short, like Netflix, Amazon now offers a month-to-month subscription option to its Amazon Prime service, including a “digital content only” option for subscribers that aren’t interested in the free shipping Prime offers. Unlike Netflix, the monthly fee for the new Amazon on-demand video service is only $8.99 … versus a new price of $9.99 for the standard Netflix plan.
Opinions on the degree of threat the new Amazon option posed to Netflix are varied, but the general consensus is, this could present a significant problem for NFLX.
Petroleo Brasileiro SA Petrobras (ADR) (PBR)
Last but not least, Brazilian oil company PBR was hit doubly hard on Monday.
The first of the one-two punch combinations stemmed from news that the Organization of the Petroleum Exporting Countries was unable to reach an output agreement that would lower the global supply, in turn boosting troubled oil prices. Oil prices fell nearly a couple of percentage points on the failure to crimp output.
The second was news that Brazil’s governing body has indeed decided to impeach President Dilma Rousseff based on her alleged misuse of funds (though not for personal purchases). Although many — perhaps most — see her ousting as the beginning of much-needed change in Brazil, there’s no doubt such a move would prove disruptive for the struggling country.
PBR closed down more than 3% on Monday.
EDITOR’S NOTE: This story has been updated to include additional news on Apple.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
