U.S. stock market futures pushed lower as renewed tensions between the U.S. and China continued to stoke fears of more trade retaliation, plus stocks to watch today in the Money & Markets Opening Bell.
The Top Story
Investors are starting to factor in an escalation in trade tensions between the U.S. and China on top of earnings, coronavirus lockdowns and economic recession.
The Department of Commerce is planning to restrict Chinese-based Huawei Technologies from buying semiconductors made with U.S. software under the Foreign Direct Product Rule.
That could lead to trade retaliation from Beijing, according to the editor of the Global Times:
Based on what I know, if the US further blocks key technology supply to Huawei, China will activate the "unreliable entity list", restrict or investigate US companies such as Qualcomm, Cisco and Apple, and suspend the purchase of Boeing airplanes.
— Hu Xijin 胡锡进 (@HuXijin_GT) May 15, 2020
American chipmakers were starting to feel the pressure as Qualcomm Inc. (Nasdaq: QCOM), Micron Technology Inc. (Nasdaq: MU) and Texas Instruments Inc. (Nasdaq: TSM) fell between 1.2% and 4% in premarket trading.
In addition, Apple Inc. (Nasdaq: AAPL) shares were off by 2.4% and Boeing Co. (NYSE: BA) shares were down by 3.3% on the latest news.
All three major U.S. stock indexes were set for their worst week since mid-March, as sobering comments on the outbreak from major U.S. officials pointed to a longer period of economic weakness.
At 9:20 a.m. EDT, Dow Jones and S&P 500 futures pushed 1.1% lower. Nasdaq Composite futures were down 1.6%.
Stocks to Watch Today
Draftkings Inc. (Nasdaq: DKNG) — The American sports betting provider posted weak first quarter earnings and revenue. The company struggled as sports have been shut down due to the coronavirus. Shares of Draftkings were down 2.3%
JD.com Inc. (Nasdaq: JD) — The Chinese e-commerce company crushed Wall Street expectations in Q1 as it reported earnings of $0.28 per share — beating estimates of $0.11 per share. It also reported a 24.8% jump in customer accounts. Shares of JD.com were up 4.6%
Abbott Laboratories (NYSE: ABBT) — Shares of the American health care company were down more than 3% in premarket trading after the Food and Drug Administration suggested Abbott’s rapid coronavirus test may have accuracy issues.
Taiwan Firm to Build Chip Factory in the US
The world’s largest manufacturer of silicon microchips is spending $12 billion to build a chip factory in Arizona.
Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) is a large contractor for Apple Inc. (Nasdaq: AAPL). TSM’s board approved the measure on Tuesday and construction of the new facility is expected to begin next year.
According to The Wall Street Journal, the new plant will make chips with 5-nanometer transistors — the smallest chips manufactured to date.
Companies That Got a PPP Loan Under $2 Million Are Getting a Big Break
Federal auditors won’t be taking a look at any businesses that borrowed less than $2 million from the Paycheck Protection Program.
According to CNBC, The Department of the Treasury and the Small Business Administration have said businesses receiving less than $2 million are considered to have met the terms for loan forgiveness in good faith.
Germany Plunges Into Recession
According to a report by Bloomberg, the German economy shrank by 2.2% in the first quarter of 2020 — the biggest slump in more than a decade.
With a revision of the nation’s fourth-quarter numbers, Europe’s largest economy is already in a recession. And it’s likely to get worse as the country has only just started lifting coronavirus restrictions.
What We’re Reading
Markets’ Return to Doldrums Set to Summon More Fiscal Firepower (Money & Markets)
NYSE to Reopen Trading Floor to Subset of Brokers in Late May (CNN Business)
Airline Stocks Take a Beating. Now Is the Time to Invest — in Options (Money & Markets)
Earnings Report
Here are the companies releasing earnings reports today:
Digirad Corp. (Nasdaq: DRAD)
JD.com Inc. (Nasdaq: JD)
Precision Biosciences Inc. (Nasdaq: DTIL)
Titan Pharmaceuticals Inc. (Nasdaq: TTNP)
U.S. Global Investors Inc. (Nasdaq: GROW)
Check back each morning before the opening bell for stocks to watch today with Opening Bell, here on Money & Markets.
Later today: We’ll drop another episode of The Bull & The Bear podcast where we will talk about the stock market sectors you should be looking at, and the ones you should avoid.
