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Weakness in Asian Markets Cause US Stocks to Sell Off


Today's financial recap and tomorrow's financial outlook.

S&P 500 (INDEXSP:.INX) futures traded down 11 points overnight due to unease coming from China. Short-term interbank lending and money market rates rose as the Chinese central bank declined to inject cash into the system. In addition, the yuan rose against the dollar to a 20-year high. The Chinese Shanghai Composite was down 1.25% in overnight trade on fears that the government would tighten policy in response to rapidly rising real estate prices.

The S&P 500 closed down 0.54% today and tech stock indices fared worse. Energy stocks were the worst performers in the S&P 500, consistent with the 2% sell-off in crude oil. Interest-rate sensitive utility and consumer staples stocks were the best performers. The FHFA said that August home prices rose 0.3% from the prior month, which was slower than the 0.8% economist estimate. Import prices fell 1.0% from a year ago, in line with economist estimates.

Carl Icahn announced last night that he sold 2.99 million of his shares in Netflix (NASDAQ:NFLX) over the last two days, more than half of his holdings in the company. Icahn still holds 4.5% of the company's outstanding shares. Netflix rose 1.8% today after falling 17.5% from yesterday's opening trade.

Caterpillar (NYSE:CAT) drastically missed earnings, citing a sharp slowdown in its mining equipment business, and guided down for the rest of the year. Caterpillar's sales fell 18% from a year ago, but forecast a pickup in US economic growth to 3% next year in the US. The stock fell 6.6% in today's trading.

Boeing's (NYSE:BA) earnings were the opposite of Caterpillar's. The aircraft manufacturer reported solid earnings and raised its full-year earnings forecast on continued strong aircraft orders. The stock rose more than 5% to new all-time highs.

Tomorrow's Financial Outlook

Initial jobless claims will be reported tomorrow morning. Economists expect claims will fall to 340,000 from 358,000 last week. The 4-week moving average is currently 336,500. Additionally, the August release of the Job Openings and Labor Turnover Survey (JOLTS) will be released in the late morning. Economists tend to look at this data closely for the true underlying health of the jobs market, though the report is much more delayed than the Labor Department's non-farm payrolls report.

A slew of manufacturing data is due out from across the globe before the US market opens tomorrow. China and the eurozone will release manufacturing and services purchasing managers indices.

Seventy major US companies are scheduled to report earnings tomorrow. Notable reports include Ford (NYSE:F), 3M (NYSE:MMM), Under Armour (NYSE:UA), Dow Chemical (DOW), Altria (NYSE:MO), Microsoft (NASDAQ:MSFT), (NASDAQ:AMZN), Western Digital (NASDAQ:WDC), and Dunkin Brands (NASDAQ:DNKN).

Twitter: @Minyanville

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