Stock Futures Signal Big Losses for Day 1 of 2019

Economic data out of China has caused weakness in equities around the globe

Jan 2, 2019 at 9:05 AM
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Futures on the Dow Jones Industrial Average (DJI) are trading far below fair value ahead of the first trading day of 2019. Investors are reacting to weak manufacturing data out of China, which has caused a sharp pullback in equity benchmarks overseas and has put fears of a global economic slowdown in focus this morning -- adding to the list of potential headwinds for bulls.

Back in the homeland, there will also be economic data to digest in the form of Markit's services purchasing managers index (PMI). There are also a large number of analyst notes for traders to wade through this morning, as Wall Street picks favorites for the new trading year.

Continue reading for more on today's market, including: 

stock futures today jan 2

5 Things You Need to Know Today

  1. The Chicago Board Options Exchange (CBOE) saw 509,501 call contracts traded on Monday, compared to 356,597 put contracts. The single-session equity put/call ratio moved up to 0.60, and the 21-day moving average ticked down to 0.72.
  2. One of the most noteworthy analyst updates this morning came out of SunTrust Robinson, which gave a bearish outlook on FAANG stock Netflix, Inc. (NASDAQ:NFLX). The brokerage firm lowered its price target on NFLX to $355 from $410 based on its view that fourth-quarter subscriber growth will come in softer than expected. The streaming giant has historically been a great stock to own in January, but is down 3.4% in pre-market action.
  3. RBC released a note this morning saying embattled bank stock Wells Fargo & Co (NYSE:WFC) is not "out of the woods" from the regulatory issues that plagued it in 2018, with the analyst cutting earning estimates for the company. Nevertheless, the brokerage firm upgraded its view on WFC to "sector perform" from "underperform," putting its price target at $48. The stock is 1.9% lower in electronic trading.
  4. Finally, Jefferies offered some insight on pharmacy rivals CVS Health Corp (NYSE:CVS) and Walgreens Boots Alliance Inc (NASDAQ: WBA). For CVS, the analyst said the company will need to execute properly for the stock to rise following its merger with Aetna, while WBA shares could struggle to gain due to a number of headwinds, including Brexit and low demand for prescription drugs.
  5. Looking ahead, the economic schedule will pick up some tomorrow.

stock market news jan 2

China Data Rocks Stocks

The aforementioned weak Chinese manufacturing data sent Asian stocks tumbling today. Specifically, the Caixin Median fell below 50 -- marking contraction territory -- for the first time since May 2017, sending China's Shanghai Composite down 1.2%. Elsewhere in the region, Hong Kong's Hang Seng plummeted 2.8%, and South Korea's Kospi gave back 1.5%. Japan's Nikkei, meanwhile, was closed for holiday.

The disappointing data out of Beijing has European markets wallowing in red ink on the first trading day of 2019, with a lackluster eurozone PMI and sinking oil prices only exacerbating headwinds. At last check, the French CAC 40 is down 1.3%, London's FTSE 100 is off 0.6%, and the German DAX is 0.2% lower.


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