Concerns over the deepening rift with China is pushing the Dow Jones Industrial Average back to levels not seen since early February, a clear breakdown below its 200-day moving average. What is worrying is that the move traces out a head-and-shoulders reversal pattern that traces a decline to the 24,000 level last seen in February, which would be worth a loss of roughly 5% from here.
There’s a lot to worry about these days, from Beijing’s threat of a rare-earth metals export ban to the risk higher tariffs present to the global supply chain network.
No wonder then that the bond market is sending its strongest recession warnings since 2007, with much of the U.S. Treasury yield curve “inverting” as long-term rates fall below short-term rates — a sign that something is very wrong with the global economy.
As a result, a number of mega-cap stocks are breaking lower. Here are four Dow Jones stocks under huge pressure.
Disney (DIS)
Despite the very hyped opening of the new Star Wars Galaxy’s Edge themed area in the Disneyland theme park, shares of Disney (NYSE:DIS) are preparing to drop out of a two-month consolidation range with a likely return to the lows seen in early April, which would be worth a fall of nearly 11% from here.
The company will next report results on Aug. 7 after the close. Analysts are looking for earnings of $1.77 per share on revenues of $21.5 billion. When the company last reported on May 8, earnings of $1.61 beat estimates by 4 cents on a 2.6% rise in revenues.
Nike (NKE)
Nike (NYSE:NKE) shares are cutting down below their 200-day moving average, falling below the $80-a-share level for the first time since January and breaking into downtrend territory for the first time since December. The company is at the center of tariff concerns, with a group of shoe companies recently asking Trump not to raise import duties on footwear.
The company will next report results on June 20 after the close. Analysts are looking for earnings of 67 cents per share on revenues of $10.2 billion. When the company last reported on March 21, earnings of 68 cents per share beat estimates by 3 cents on a 7% rise in revenues.
Apple (AAPL)
Apple (NASDAQ:AAPL), the world’s most important technology company, is returning to levels seen in early March as analysts worry the deepening trade war will have a direct impact on its bottom line. Not only is the company vulnerable to U.S. imports on products coming in from China (with iPhone and laptops to be affected by the next round of tariffs) but sales to Chinese consumers are vulnerable to a nationalist boycott.
The company will next report results on July 30 after the close. Analysts are looking for earnings of $2.1 per share on revenues of $53.47 billion. When the company last reported on April 30, earnings of $2.46 beat estimates by 10 cents on a 5.1% decline in revenues.
Caterpillar (CAT)
Shares of heavy equipment maker Caterpillar (NYSE:CAT) have returned to lows not seen since December, down more than 17% from their recent high. Farm and heavy equipment makers such as CAT and Deere (NYSE:DE) are at risk from lower sales into China (as the trade war hurts their export-oriented economy) as well as to U.S. farmers, as Beijing retaliates by buying less American foods.
The company will next report results on July 24 before the bell. Analysts are looking for earnings of $3.12 per share on revenues of $14.54 billion. When the company last reported on April 24, earnings of $2.94 beat estimates by 8 cents on a 4.7% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
