Auto Stocks Lead Steep Pre-Market Slide on Trump Tariff Surprise

The major market indexes are already on pace for a hefty May loss

Managing Editor
May 31, 2019 at 9:20 AM
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Futures on the Dow Jones Industrial Average (DJI) are signaling a negative open, down more than 200 points, after President Donald Trump tweeted he will impose a 5% tariff on Mexican imports beginning June 10. "The Tariff will gradually increase until the Illegal Immigration problem is remedied," he wrote. Auto stocks are among those hardest hit by the tariff surprise, with General Motors (GM) and Fiat Chrysler (FCAU) among the many decliners ahead of the bell. This, as the Dow and S&P 500 Index (SPX) pace for steep monthly losses due to concerns about the trade war with China.

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

  • How options traders are calling an oil bottom.
  • Booming Snap stock blitzed by call buyers. 
  • Analyst: Tesla is stalling as a "niche automaker."
  • Plus, Costco reports earnings; the Sephora rival suffering a post-earnings plunge; and why Okta stock is being showered in bull notes .

OV Futures Chart May 31

5 Things You Need to Know Today

  1. The Chicago Board Options Exchange (CBOE) saw 900,243 call contracts traded on Thursday, compared to 574,384 put contracts. The single-session equity put/call ratio rose to 0.64, while the 21-day moving average stayed at 0.69.
  2. Costco Wholesale Corporation (NASDAQ:COST) stock is down 1.5% in electronic trading, after the company’s same-store sales fell short of expectations. Although the wholesale chain plans to ride out the impact of tariffs on Chinese imports, the long-term effects remain unknown. COST stock hit a record high of $251.01 as recently as May 22, but has pulled back 2.3% so far this week.
  3. Sephora rival Ulta Beauty Inc (NASDAQ:ULTA) is trading 4.1% in the red pre-market, after the company shared first-quarter earnings that beat estimates, but disappointed with a revenue miss. Oppenheimer was quick to cut its price-target to $370 from $400, while Jefferies hiked its target to $370 from $357. Ulta stock is up 34% year-to-date, but is in danger of filling its mid-March bull gap
  4. Software concern Okta Inc (NASDAQ:OKTA) is impressing investors this morning, already up 6.5% before the bell. Okta reported a narrower-than-expected first-quarter loss, and better-than-expected revenue. The security has seen no fewer than seven price-target hikes in response, including one to $137 out of Needham. OKTA has already added 92% over the past 12 months, and could touch record highs today.
  5. Today will close out the month of May with data on personal income and consumer spending, the personal consumption expenditure (PCE) price index, the Chicago purchasing managers index (PMI), and the University of Michigan's consumer sentiment index. Plus, Genesco (GCO) will report quarterly earnings, and a speech from New York Fed President John Williams is on the docket.   

stock market news may 31

Energy Sector Weighs on European Markets

It was mostly a lower finish for stocks in Asia. Automakers in the region were hit hard on the news of Trump's aforementioned tariff blow, while weak manufacturing data out of China was also in focus. Despite spending some of the session in positive territory, the Shanghai Composite closed down 0.2%, while Hong Kong’s Hang Seng settled with a sharper 0.8% loss. The Nikkei suffered an even steeper decline, down 1.6% at the close, hit hard by the sell-off in auto stocks. Bucking the weakness was South Korea’s Kospi, closing up 0.1%.

European stock indexes are also in the red at midday. Weakness in oil prices is resulting in heavy losses in the energy sector, while auto stocks are following the lead of their Asian peers. As such, the German DAX has dropped 1.7%, France’s CAC 40 is down 1.4%, and London’s FTSE 100 has given back 0.9%.

 

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