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Markets in Shock After Apple Falls Far from the Tree


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

The Dow Jones Industrial Average, S&P 500 and Nasdaq all finished negative today on mixed economic data and distinct weakness in risky stocks.

Apple (Apple) dropped 2.7% on a Wall Street Journal report saying that the company limited availability of its Watch product line due to a defective key component.

The biotech sector took a large hit today.

The Nasdaq Biotechnology ETF (IBB) fell 3.2%, while the S&P Biotech ETF (XBI) dropped 4.4%.

The decline was led by biotech heavyweight Celgene (CELG), which fell 4% after reporting a revenue miss. The company blamed the impact of the strong dollar.

There was also notable weakness in cybersecurity and social media stocks.

The weakness in high-beta stocks drove the Nasdaq to underperform with a 1.6% decline vs a 1.0% drop for the S&P 500.

The Russell 2000 (RUT) also fell 2.2%.

Fear also clearly set in, with the VIX (VIX) rising 7.9%.

In economic data, jobless claims and the Chicago PMI were better-than-expected, but personal income, personal spending, and PCE deflator data was weak. (CRM) dropped 2.5% today after rising 11.6% yesterday on a Bloomberg report stating that the company had hired bankers to handle takeover offers. However, several Wall Street analysts expressed skepticism towards the possibility of a deal due to regulatory and valuation concerns, among others.

Euro-Zone CPI was flat in April, pushing away fears of deflation and pushing up bond yields. Bond yields have been severely depressed from traders's anticipation of Quantitative Easing by the European Central Bank. Europe recorded negative inflation since December, hitting a low of -0.6% in January.

Greek markets were up after Prime Minister Alexis Tsipras told his cabinet that he was confident a deal with be reached to unlock bailout aid before the debt payment deadline id reached. The Athens Stock Exchange General Index was up 3.1%.

The Russian central bank cut its key rates by 150 bps to 12.5%. Economists were expecting a 100 bps cut.

Japan's Nikkei 225 fell 2.7%  after the Bank of Japan pushed back its timing target for its 2% inflation goal and cut its growth estimate. However, the government did not add to its stimulus program.

Friday's Financial Outlook

Tomorrow's US economic data announcements will include Markit Manufacturing PMI, Construction Spending, ISM Manufacturing and Prices Paid, University of Michigan Sentiment, and Ward's Auto Sales.

Overseas, we will seel have UK's Markit PMI and Canada's RBC Manufacturing PMI numbers.

Earnings announcements before the open include Chevron Texaco (CVX) and CVS Health (CVS).

After the close, we have Berkshire Hathaway (BRK.B)

No positions in stocks mentioned.
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