Apple's surprise sales warning sets Wall St for lower open

(Reuters) – Wall Street was set to open lower on Tuesday as a surprise sales warning from bellwether Apple fanned worries about the impact of the coronavirus outbreak on global supply chains.

The world’s most valuable technology firm (AAPL.O) said it was unlikely to meet its March-quarter sales guidance because of slower iPhone production and weaker demand in China, sending its shares down 2.3% in premarket trading.

The news also sent shares of Apple suppliers, including Qualcomm Inc (QCOM.O), Broadcom Inc (AVGO.O), Qorvo Inc (QRVO.O) and Skyworks Solutions Inc (SWKS.O), lower by 1.4% to 2.3%.

Apple’s warning highlights issues that will eventually hurt a lot of companies with exposure to China, said Art Hogan, chief market strategist at National Securities in New York.

“It has shifted people’s focus back to the ultimate economic damage in the wake of this coronavirus,” Hogan said.

While the exact hit to growth from the epidemic in China – the global manufacturing hub – still remains to be seen, hopes that the damage would only be temporary have helped Wall Street’s main indexes clinch record highs as early as last week.

Offering some relief to investors on Tuesday was China’s promise to grant exemptions on retaliatory duties imposed against 696 U.S. goods, as Beijing seeks to fulfill commitments made in its interim trade deal with the United States.

At 8:54 a.m. ET, Dow e-minis 1YMcv1 were down 151 points, or 0.51%. S&P 500 e-minis EScv1 were lower 13.25 points, or 0.39% and Nasdaq 100 e-minis NQcv1 were down 52 points, or 0.54%.

Investors also parsed through mixed earnings reports.

Walmart Inc (WMT.N) forecast slowing online growth for the year after reporting weak results for the holiday quarter that suggested it was leaking sales to However, shares of the world’s biggest retailer rose 0.9%.

Conagra Brands Inc (CAG.N) shed 6.5% after the packaged food company lowered its full-year profit and sales outlook.

Among other stocks, Kroger Co (KR.N) climbed 5.8% after Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) unveiled a $549.1 million stake in the supermarket chain.

Asset manager Franklin Resources Inc (BEN.N) said it would buy mutual fund company Legg Mason Inc (LM.N) in an all-cash deal valued at $4.5 billion, to create an investing giant with about $1.5 trillion in assets under management.

Shares of Franklin jumped 14.3% and Legg Mason surged 23.4%.

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