What's moving markets today: May 20,2019

10:29 a.m. ET, May 20, 2019

Apple analyst warns of more China problems

One of the most bearish analysts who covers Apple believes even more bad news lies ahead. Apple's (AAPL) stock tumbled 3% Monday after HSBC's Erwan Rambourg lowered his price target on the iPhone maker to $174 a share. That's 5% below the current price and among the lowest targets for Apple on Wall Street.

Rambourg, who has a "reduce" rating (essentially a "sell") on Apple, argues that investors should be more concerned about higher tariffs on goods produced in China making already expensive iPhones even pricier in the United States. He also believes Chinese consumers may increasingly shun Apple in favor of phones made by homegrown tech firms like Huawei and Xiaomi.

Despite these worries, Apple's stock is still up about 16% this year, making it one of the best performers in the Dow. Investors seem to approve of CEO Tim Cook's push to make Apple more of a services company. But Rambourg thinks that faith may be misplaced.

We have been surprised at how the market has given Apple the benefit of the doubt," Rambourg wrote.
10:16 a.m. ET, May 20, 2019

Luckin Coffee slips on its second trading day

Luckin Coffee (LK), Starbuck's big rival in China, closed 20% higher on its first day of trading.

How's the second day going? Not so hot, according to our Paul R. La Monica:

10:23 a.m. ET, May 20, 2019

Trade war fallout: Dow slides 200 points, Nasdaq tumbles almost 2%

Fears about the US-China trade war rattled Wall Street today, prompting investors to dump tech stocks like Apple.

Tech stocks fell sharply as investors fret over the fallout of the Trump administration’s crackdown on Chinese tech giant Huawei.

Chip makers Qualcomm (QCOM), Micron (MU), Advanced Micro Devices (AMD) fell 3% or more. The VanEck Vectors Semiconductor ETF (SMH) slumped.

Apple (AAPL), which relies on China for a chunk of its sales, lost 4%.

The culprit once again is trade concerns with China, and the technology sector is bearing the brunt of the weakness," Paul Hickey, co-founder of Bespoke Investment Group, wrote in a note to clients.

Sprint (S) surged 24% after FCC Chairman Ajit Pai announced his support for the Sprint/T-Mobile merger. To win FCC approval, Sprint has agreed to unload its Boost Mobile prepaid business.

T-Mobile (TMUS) shares jumped 5%. The deal still requires antitrust approval from the US Justice Department.

9:21 a.m. ET, May 20, 2019

Ford will lay off 7,000 white-collar workers

Ford (F) is cutting 7,000 white-collar jobs, or about 10% of its salaried staff worldwide, as part of a cost-cutting effort it says will save the company about $600 million a year.

The company says workers will begin to be notified of cuts starting Tuesday, and the terminations will be completed by the end of August. About 2,400 of the jobs cuts are in North America, and 1,500 of the positions were eliminated through a voluntary buyout offer.

Read more here.

10:40 a.m. ET, May 20, 2019

Sprint soars 25% after FCC chairman backs T-Mobile deal

The planned merger between Sprint and T-Mobile is reportedly moving forward because the Federal Communications Commission chairman is ready to clear his part of the $26 billion deal if the companies make changes.

"In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it," FCC chairman Ajit Pai said, according to Reuters.

The news sent both of the stocks soaring: Sprint (S) is up 25% and T-Mobile (TMUS) is up 7% in early trading.

The Department of Justice still needs to approve the merger. Antitrust officials are concerned about the impact it will have on competition in the wireless industry.

The deal was initially announced in April 2018.

8:29 a.m. ET, May 20, 2019

Deutsche Bank shares just hit an all-time low

Shares of Germany's biggest bank hit a record low in European trading on Monday, piling more pressure on management ahead of the company's annual shareholder meeting later this week.

Deutsche Bank shares dropped almost 3% after UBS changed its rating of the company's stock to "sell" from "neutral." Shares are down almost 40% in the past year.

The thinking: Deutsche Bank's revenues are shrinking and "remain under pressure," UBS said. It doesn't expect any big strategic moves soon.

Up next: CEO Christian Sewing has faced calls to articulate a new plan for the struggling bank after a potential merger with Commerzbank fell apart last month. There could be fireworks if he fails to do so at the annual meeting on Thursday.

What else: The New York Times reported that Deutsche Bank anti-money laundering specialists once recommended that transactions involving entities controlled by President Donald Trump and his son-in-law, Jared Kushner, be reported to a US agency that investigates financial crimes. The Times said executives at Deutsche Bank rejected the advice of their specialists.

  • CNN Business could not immediately verify any of the claims.
  • Deutsche Bank told CNN Business: "At no time was an investigator prevented from escalating activity identified as potentially suspicious.”
7:29 a.m. ET, May 20, 2019

Chip stocks are getting clobbered

It appears it's going to be another tough week for chipmakers, partly prompted by rising trade tensions with China and the United States' blacklist on Huawei technology.

Bloomberg reported late Sunday that Intel (INTC), Qualcomm (QCOM) and Broadcom (AVGO) will stop working with the Chinese tech firm. Google (GOOGL) also announced reduced ties with Huawei.

Qualcomm is off more than 3% in premarket trading. Other chip makers, including Analog Devices (ADI), Xilinx (XLNX) and Micron Technology (MU) are the biggest S&P 500 losers, all declining more than 3.8%.

6:53 a.m. ET, May 20, 2019

Tesla is 'facing a quagmire,' analyst warns

Tesla (TSLA) shares are sinking more than 4% in premarket trading after Wedbush Securities analyst Daniel Ives warned that he has "major concerns" about CEO Elon Musk and the company.

Here's what Ives said in a new note:

We continue to have major concerns around the trajectory of Tesla's growth prospects and underlying demand on Model 3 in the US over the coming quarters which is putting more heat in the kitchen on Musk & Tesla to rein in expenses at an accelerated rate with profitability targets in [the second half of 2019] a Kilimanjaro-like uphill climb, in our opinion.

He said that Tesla is "facing a quagmire" because it's doing several things at once, such as building a new factory in China, developing the next Model Y and continuing to ramp up production of the Model 3, all while "facing a growing cash crunch and high expense structure issue."

He lowered the stock's price target from $275 per share to $230 because of "reduced confidence in the company's ability to hit its 2019 unit demand guidance."

Tesla closed at $211.03 per share on Friday. The stock is down 37% for the year.

6:24 a.m. ET, May 20, 2019

Google dumps Huawei

Google (GOOG) is cutting back on its business with Huawei following an order from the Trump administration barring American companies from selling to the Chinese tech firm without a US government license.

Huawei relies on Google's Android operating system for its devices, as well as the Google Play app store.

We are complying with the order and reviewing the implications," a Google spokesperson said Monday.

The restrictions deal a huge blow to Huawei's ambitions to overtake Samsung (SSNLF) as the world's biggest smartphone maker. Huawei phones are much less attractive outside China without Google services, according to analysts.

The news is likely to feed investor unease about the US-China trade war as negotiations between Washington and Beijing appear to stall.

Traders will continue to keep a close eye on the yuan, which was little changed Monday. 

The currency's steep slide against the dollar in recent weeks could complicate talks further.