Stocks have been lower from the outset of the session after Broadcom (AVGO) cut its annual sales forecast due to trade war uncertainty. Additionally, gains in retail sales and a better than expected report on industrial production may be suggesting that the economy is healthy enough for the Federal Reserve to hold off on an interest rate cut, potentially giving stocks another headwind as a rate cut has become largely factored in by the market as of late.
ECONOMIC EVENTS: In the U.S., the retail sales report beat estimates via revisions, with expected May gains of 0.5% both with and without autos. The industrial production report beat estimates with a surprising 0.4% May rise after offsetting revisions over the prior three months. Business inventories rose 0.5% in April, while sales fell 0.2%, as expected. The University of Michigan consumer sentiment reading eased back 2.1 ticks to 97.9 in the preliminary reading for June, giving back some of the 2.8 point bounce to 100.0 in May.
In China, data was mixed. Retail sales for May rose 8.6% year-over-year, which was up from April and better than the consensus growth forecast. However, industrial production growth fell short with a rise of 5% that missed consensus.
TOP NEWS: Shares of Broadcom fell 7% after the company reported lower than expected revenue for the second quarter and lowered its revenue guidance for fiscal 2019. Of note, Broadcom CEO Hock Tan said that the comapny anticipates a "broad-based slowdown in the demand environment."
Sony (SNE) shares were trading 3% higher near noon in New York after activist investor Third Point confirmed a $1.5B investment in the Japanese conglomerate, saying in a letter to shareholders that Sony's valuation "does not reflect either the quality of the Company's businesses or the opportunity to create meaningful, long-term value through targeted capital allocation and further operational improvement." In the letter, the firm said that Sony should consider a spin-off of its semiconductors business into a standalone public stock to be listed in Japan and suggested that it consider positionining itself as a "leading global entertainment company."
In IPO news, online pet supplies retailer Chewy (CHWY) made its debut on the New York Stock Exchange today. The initial public offering was priced at $22 per share and opened at $36 per share. At time of writing, shares of the online pet goods retailer are trading just below their opening price at $35.67.
MAJOR MOVERS: Among the noteworthy gainers was ArQule (ARQL), which surged 35% after announcing preliminary results from the company's phase 1 dose escalation study for ARQ 531. Also higher was Bluegreen Vacations (BXG), which rose 35% after announcing that Bass Pro and its affiliates and the company have settled their prior disputes and have amended their marketing and promotions agreement to reinstate Bluegreen's access to Bass Pro's marketing channels.
Among the notable losers was Ashford Hospitality (AHT), which dropped 15% after cutting its dividend to 6c per share. Also lower was Fastenal (FAST), which fell 4% after Buckingham analyst Robert Barry cut his FY19 and FY20 estimates by about 2% each to factor in April and May sales results and following his visit with management.
INDEXES: Near midday, the Dow was down 20.97, or 0.08%, to 26,085.80, the Nasdaq was down 40.62, or 0.52%, to 7,796.51, and the S&P 500 was down 6.65, or 0.23%, to 2,884.99.