It’s finally happening. After a six-month reprieve from the volatility that first appeared early last year, Wall Street is being rattled by a combination of pretty much everything going wrong at a time when stocks were priced for everything going right.
We’re facing the worst-case scenario on U.S.-China trade, with President Trump vowing to raise tariffs on all Chinese imports into the United States while Beijing is retaliating with threats to cut its imports of U.S. farm products, energy and Boeing (NYSE:BA) aircraft. There are reports of possible Iranian attacks on oil infrastructure in the Persian Gulf. The Uber (NYSE:UBER) IPO is face planting, undercutting years of VC-funded hype.
And, most critically, the Chinese are also threatening to dump U.S. Treasury bonds, which could push up long-term interest rates. The Federal Reserve could be constrained in how it responds if energy-push inflation, driven by Iranian responses to energy sanctions placed on it by Trump, results from higher crude prices.
As a result, the market is melting lower with the Dow Jones Industrial Average falling below its 200-day moving average for the first time since February. A number of widely held mega-caps are getting caught in the whirlwind, including these five widely popular stocks.
Apple (AAPL)
Apple (NASDAQ:AAPL) shares are falling below their 200-day and 50-day moving averages in one fell swoop, threatening to decline back to the lows seen in March. The company is not only affected by the trade tensions — Trump’s widened tariffs will impact iPhone imports and Chinese consumers will likely boycott Apple’s products to show nationalistic pride — but the U.S. Supreme Court ruled against the company in an App Store antitrust lawsuit claiming the company artificially raised app prices.
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 $53.4 billion. When the company last reported on April 30, earnings of $2.46 per share beat estimates by 10 cents on a 5.1% decline in revenues.
Boeing (BA)
Boeing shares are crashing back to earth, wiping away the January-February gains, as the company continues to contend with the fallout from its 737 MAX grounding as well as threats of import cuts by China — a critical market for the aircraft maker. This returns shares to the middle of a two-year-long trading range and sets up a test of the late 2018 lows, which would be worth a loss of roughly 15% from here.
The company will next report results on July 24 before the bell. Analysts are looking for earnings of $1.8 per share on revenues of $21.5 billion. When the company last reported on April 24, earnings of $3.16 per share missed estimates by 3 cents on a 2% drop in revenues.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) shares, like Boeing, are falling hard as the company is vulnerable to a cut in its exports to the Chinese markets. The heavy equipment maker is seeing prices fall back to levels not seen since January, marking a decline of nearly 14% from its April high. Management tried to change the story earlier this month, with an increase to its quarterly dividend and a guidance update. But the company can’t escape the broader, macroeconomic trends that will likely weigh on its plans to boost its share repurchase program as well.
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 $14.5 billion. When the company last reported on April 24, earnings of $2.94 per share beat estimates by 8 cents on a 4.7% rise in revenues.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) shares are threatening to fall below their 50-day moving average, setting up a test of the 200-day average which could give way to a drop back to the $1,600 level. This drop would be a loss of more than 12%. The struggle marks a turnaround from double-top resistance near $2,000 — a level that was reached to great fanfare last summer.
The company will next report results on July 25. Analysts are looking for earnings of $5.2 per share on revenues of $62.5 billion. When the company last reported on April 25, earnings of $7.09 beat estimates by $2.43 on a 17% rise in revenues.
Bank of America (BAC)
Bank of America (NYSE:BAC) shares are dropping hard below their 200-day moving average, threatening to return to levels last seen in late March, which would be worth a loss of more than 7% from here. Shares have been stalled near current levels since late 2017, and could well end up falling back to post-2016 critical support near $22, which would be worth an additional 15% loss from here.
The company will next report results on July 16 before the bell. Analysts are looking for earnings of 72 cents per share on revenues of $23.2 billion. When the company last reported on April 16, earnings of 70 cents per share beat estimates by 4 cents on a 0.4% drop in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
