Monday trading is over and worries over the future of the tech industry are challenging the trade war for the limelight. Here’s what investors are focusing on for Tuesday.
What's moving markets today: June 3, 2019
By CNN Business
Stocks closed mixed on Monday, as investors fretted about a possible regulatory crackdown on the tech industry, as well as trade.
Microsoft (MSFT) was the biggest loser in the Dow, dropping 3.1%.
Apple is replacing iTunes on Macs with three separate desktop apps for music, podcasts and TV.
That's similar to how these services were already organized on iPhones and iPads.
The move doesn't come as a surprise. The company has been pushing users toward its Apple Music subscription service, which charges a monthly fee.
Stocks dropped further in the last hour of the trading day, with the Nasdaq falling nearly 2% as investors worried about regulation in the tech sector.
Meanwhile, the Dow was down some 90 points, or 0.3%, and the S&P 500 fell 0.6%. Both indexes had briefly pared their losses earlier in the afternoon following comments on a potential interest rate cut by St. Louis Fed President James Bullard.
Ratings agency Fitch warned that US tariffs on Mexican imports would increase uncertainty surrounding the US-Mexico-Canada (USMCA) trade agreement.
USMCA was agreed to last November and is supposed to replace the North America Free Trade Agreement (NAFTA).
It's not just the trade deal that could be in jeopardy. The Mexico tariffs would also negatively affect cash flows for companies, said Fitch, particularly the auto industry.
Eddie Lampert, who reacquired Sears out of bankruptcy earlier this year, is now repurchasing Sears Hometown and Outlet Stores.
Sears Hometown and Outlet Stores (SHOS) at a glance:
- Lampert spun off Sears Hometown from Sears in 2012.
- The stores specialize in appliances and lawn/garden products.
- Sears Hometown stores are much smaller than a typical Sears store. They tend to be only about 8,000 to 10,000 square feet, compared to 160,000 square feet for Sears.
- The specific stores are franchisee owned, but the inventory is owned by Sears Hometown.
Lampert was the CEO and primary shareholder of Sears when Sears Hometown was spun off of Sears Holdings. ESL, the holding company controlled by Lampert that reacquired Sears out of bankruptcy, already owned 58% of the Sears Hometown and Outlet shares.
Shares of Sears Hometown rose 8% on the offer, bringing it slightly above the $2.25 price that ESL is offering for the shares.
But the offer does allow for a slight upward adjustment in the price based on certain conditions being met. Monday's stock price of $2.35 is still only a fraction of the $31 IPO price from October 2012.
Apple (AAPL) unveiled the new Mac Pro at WWDC. It's designed for professional users who need it for things like production rendering and video editing.
The flagship desktop computer hadn't seen a major upgrade since 2013.
It features a new Intel Xeon processor, 300 watts of power and up to 1.5 terabytes of memory.
The tech-heavy Nasdaq was taking a beating Monday as investors worried about the possibility of a major regulatory crackdown on some of the sector's leading companies.
Shares of Google owner Alphabet (GOOGL), Amazon (AMZN), Facebook (FB) and Apple (AAPL) had collectively lost nearly $145 billion in market value as of midday afternoon, thanks to several reports suggesting that the US Department of Justice and Federal Trade Commission were going to look more closely at how much power these companies wield in the tech marketplace.
Alphabet has been lower all day, dropping nearly 7%, due to reports that the US Department of Justice was opening up an antitrust investigation. That news was followed by speculation that Amazon and Facebook may also be in the cross hairs of regulators. Amazon fell 4.5% while Facebook was down more than 7%.
If that wasn't enough, there were reports later Monday about Apple also being targeted in a government review of Big Tech. Apple shares gave up their gains from earlier in the day as a result, sliding about 1%. The stock had been higher in anticipation of new product announcements from its World Wide Developers Conference.
The Federal Reserve may need to cut interest rates soon, according to James Bullard, president of the St. Louis Federal Reserve.
Bullard is a voting member of the Fed committee that sets rates. His comments came in light of ongoing trade war turmoil and concerns about weak inflation in the United States.
A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown," he said during a presentation at the Union League Club of Chicago.
The personal consumption expenditure index — the Fed's preferred measure of inflation — stood at an annualized rate of 1.5% in April, well below the 2% target.
The central bank has raised interest rates nine times since cutting them to record lows in the aftermath of the financial crisis. But it took its foot off the gas in January and has been patient ever since.
The chances of a rate cut happening have been increasing, though. investors see a 97% chance that a rate cut could happen by the end of the year, according to CME's FedWatch tool.
President Donald Trump has been calling on the central bank to cut rates and stimulate the US economy by cutting rates.
Stocks responded positively to Bullard's comments — lower interest rates are favorable for companies. The Dow briefly turned green, and the S&P 500 pared its previous losses. But both indexes soon slipped lower again.