Broadly speaking, stocks were steady today as U.S. President Donald Trump and Chinese President Xi Jinping head toward the highly anticipated G-20 summit in Japan to discuss, among other issues, trade.
“What remains far more crucial about this meeting is whether it helps steer the increasingly complex relationship back on a familiar course or whether it stirs winds and currents that sweep us further off into uncharted waters,” according to a recent note by Christopher Smart of the Barings Investment Institute.
Today, the Nasdaq Composite rose 0.32% while the S&P 500 fell 0.12%. The Dow Jones Industrial Average nudged lower by 0.04%.
As was noted on Monday, two Dow components — Nike (NYSE:NKE) and Walgreen Boots Alliance (NASDAQ:WBA) — report quarterly results tomorrow. Let’s focus on Walgreen for a moment because that report is out before Thursday’s opening bell.
The company, shares of which are down a staggering 23% year-to-date, is expected to post earnings per share of $1.43.
“The company mostly missed Wall Street expectations last quarter, and investors are hoping things will be different this time around, despite a trend downward in predicted earnings,” according to MarketWatch. “Analysts polled by FactSet are predicting third-quarter earnings of $1.43 per share, lower than the EPS in the year-ago quarter of $1.53. Profit should be $1.311 billion, down from $1.522 billion a year ago.”
With that, let’s get into some of the Dow’s big movers today.
Semiconductor giant Intel (NASDAQ:INTC) is one of the Dow Jones’ smallest components, but it was the index’s biggest winner Wednesday, surging 3%. Explaining Intel’s bullishness today is pretty easy. First, the broader semiconductor space rallied following an encouraging update from Micron (NASDAQ:MU). Micron isn’t the group’s biggest name, but is considered a bellwether.
“We are confident that the long-term demand outlook for memory and storage is compelling, driven by broad secular trends such as AI, autonomous vehicles, 5G, and IoT,” CEO Sanjay Mehrotra said on a call with analysts yesterday.
Second, Intel and its chip brethren likely traded higher in anticipation of the G-20 summit resulting in a thaw in U.S./China trade tensions.
Shares of Apple (NASDAQ:AAPL) added 2.2% today for many of the same reasons Intel charged higher, meaning trade hopes and Micron’s bullish comments. On Tuesday, Cascend Securities noted Apple is working its way through iPhone supply gluts.
The research firm noted April was the second straight month of year-over-year iPhone growth and price cuts are helping boost sales in the current quarter.
Apple bulls take heart: Historically, Apple is one of the best performers in the S&P 500 in the third quarter and the second quarter ends Friday, so you see where we’re going with this.
Nike, the other Dow component that reports earnings tomorrow (after the bell), was mostly flat today.
“Analysts are expecting Nike to earn 66 cents a share and report revenue of $10.15 billion. That compares with EPS of 68 cents and revenue of $9.61 billion in the fiscal third quarter,” according to Barron’s.
Bottom Line on the Dow Jones Today
There has been plenty of sluggishness in U.S. equities over the past few days, but Thursday brings plenty of opportunities for excitement. Of the two earnings reports, Nike is bound to be more significant for myriad reasons, including its larger weight in the Dow and its significant exposure to trade tensions.
Nike’s outlook for the third quarter and full year could be vital to the broader market’s near-term fortunes because that commentary is likely to include verbiage about China and tariffs.
“Indeed, analysts have been busy revising down their earnings estimates for the third quarter, even as S&P 500 companies are forecast to see an earnings decline of 2.6% in the second quarter of 2019, compared a year ago, according to FactSet,” reports MarketWatch.
As of this writing, Todd Shriber did not own any of the aforementioned securities.