Stocks opened deep in negative territory, with the early weakness attributed to poor economic data out of China and the U.S. government shut down entering its 24th day. Investors are concerned about the upcoming earnings season, specifically the guidance from companies about the effect of the trade war and government shutdown. The market has pared it losses, but the averages are drifting in negative ground near midday.
ECONOMIC EVENTS: In the U.S., no economic data of note was reported.
In China, exports fell 4.4% in December from a year earlier, versus expectations for growth of 2%. A 7.6% drop in imports not only missed the consensus forecast for growth of 4.5% it was also the worst reading since 2016 amid the ongoing trade dispute with the U.S.
COMPANY NEWS: Citi (C) kicked off earnings season for the big banks by reporting fourth quarter earnings, excluding the impact of tax reform, that topped expectations but revenue that missed the consensus forecast. Citi CEO Michael Corbat said a "volatile fourth quarter impacted some of our market sensitive businesses, particularly Fixed Income," but noted that Citi's Treasury and Trade Solutions, Securities Services, Private Bank and Corporate Lending business lines "continued their strong performance."
PG&E Corporation (PCG) said that it and its regulated utility subsidiary, Pacific Gas and Electric Company, are "facing extraordinary challenges relating to a series of catastrophic wildfires" and has decided that commencing reorganization cases under Chapter 11 of the bankruptcy code is "appropriate, necessary and in the best interests of all stakeholders." PG&E shares have plunged nearly 50% following the bankruptcy warning.
In M&A news, Newmont Mining (NEM) and Goldcorp (GG) announced they have entered into a definitive agreement to combine in a stock-for-stock transaction valued at $10B. Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share, which the company said represents a 17% premium. Newmont and Goldcorp shareholders will own approximately 65% and 35% of the combined entity, respectively, following the planned tie-up. Additionally, Gannett (GCI) confirmed that it has received an unsolicited proposal from MNG Enterprises to acquire the company for $12 per share in cash, which Gannett said it will review "consistent with its fiduciary duties."
MAJOR MOVERS: Among the noteworthy gainers was USA Technologies (USAT), which rose 20% after announcing the reorganization of its management team after an audit committee probe.
Also higher was lululemon (LULU), which gained 9% after it raised its guidance for the fourth quarter.
Among the notable losers was Tailored Brands (TLRD), which slid 14% after it lowered its Q4 and fiscal 2018 outlook due to Jos. A. Banks results.
Also lower was Prestige Brands (PBH), which fell 13.5% after it reported lower than expected preliminary Q3 revenue and cut its outlook for fiscal 2019.
INDEXES: Near midday, the Dow was down 115.34, or 0.48%, to 23,880.61, the Nasdaq was down 53.68, or 0.77%, to 6,917.80, and the S&P 500 was down 14.96, or 0.58%, to 2,581.30.