The worry is now that a trade deal will be pushed off until after the 2020 election. That idea spooked investors on Tuesday, as we saw another decline in the stock market today.
The S&P 500 fell more than 1% in early trading, as did the Nasdaq Composite. While buyers stepped up throughout the session — and as support came into play in the intermediate term — there’s not a wide basin of trust that this will be enough to buoy the markets.
The trade situation hasn’t completely unraveled, but it’s certainly giving investors pause. On Monday, President Donald Trump slapped tariffs on several South American countries. While that wasn’t a huge deal, investors viewed it as a shot across the bow to China. On Tuesday, Trump said a trade deal with China may have to wait until after the 2020 presidential elections.
All of the action has been a weight on equity investors, but a tailwind for gold investors. The yellow metal hit a one-month high on Tuesday.
The trade situation is relatively simple from here. Either the rhetoric gets worse and stocks continue to move lower or they improve, and bulls stay in control.
Movers in the Stock Market Today
We’ll get a few more reports this week, but Coupa Software (NASDAQ:COUP) was the name to focus on for earnings on Tuesday. Earnings of 20 cents per share smashed expectations by 14 cents, while revenue of $101.8 million grew 50.9% year-over-year and easily topped expectations more than $5.5 million.
Margins increased year-over-year and beat analysts expectations as well. Further, management raised its full-year outlook for both earnings and revenue, which also came in well above analysts’ estimates. Yet, the stock fell over 6% at one point Tuesday.
Talk about being shortsighted.
Intel (NASDAQ:INTC) is reportedly looking to acquire Habana Labs, an Israeli chip company. Reportedly, the company is looking to spend $1 billion to $2 billion on the deal. Habana is a company Intel is familiar with, given that it led an investment round in the company 13 months ago.
Cleveland-Cliffs (NYSE:CLF) shares fell about 10.7% after announcing it will buy AK Steel (NYSE:AKS) for $1.1 billion. Shares of the latter rallied 4.3% on the day. There are skeptics on the deal though, as it values AKS at a higher valuation than its peers, while carrying a higher debt ratio compared to CLF.
Tesla (NASDAQ:TSLA) stock inched higher Tuesday, on rumors that the it is requesting Model Y parts earlier than expected. Deutsche Bank analysts believe the vehicle could be ready as soon early 2020. Just the other day, a Model Y was spotted in the wild, too.
Heard on the Street
Is Lululemon Athletica (NASDAQ:LULU) the next Nike (NYSE:NKE)? According to Cowen analysts, it may be.
If LULU shares traded with the same cash-flow valuation as Nike, it would garner a $40 billion market capitalization. That’s up significantly from the $29.5 billion market cap LULU currently commands. The analyst remains optimistic on the business, maintaining their “outperform” rating and $250 price target. That implies over 12% upside.
Needham was already bullish on Roku (NASDAQ:ROKU) and apparently Monday’s 15% decline didn’t scare them. They upped their $150 price target to $200 per share, implying 38% upside even after Roku’s 6.3% rebound on Tuesday.
Deutsche Bank analysts reinstated their “buy” rating on Ulta Beauty (NASDAQ:ULTA). In doing so, they also slapped a $285 price target on the stock.
Piper Jaffray kicked off Tuesday with a couple of high-profile initiations. The analysts assigned an “outperform” rating on both Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). They assigned price targets of $230 and $1,500 respectively.
Notably, Citigroup analysts upped their price target on GOOGL to $1,450 from $1,500 on Tuesday as well.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ROKU and GOOGL.
