Stocks slipped lower at Monday's open, with the tech-sector under pressure and markets looking toward the Federal Reserve's monetary policy vote Wednesday.
XThe Nasdaq Composite paced the early decline, down 0.9% as Facebook (FB) fell hard and Apple (AAPL) and Tesla (TSLA) shifted sharply lower.
The Dow Jones industrial average and S&P 500 each lagged 0.5%.
A number of news items affecting Apple and Facebook rippled across early trade. In addition, news late Friday of the firing of the FBI's Andrew McCabe — followed by amped-up criticism from the White House of special counsel Robert Mueller's investigation — may have had some early impact on investor confidence. The White House came under sharp criticism early Monday for speaking out against Mueller's probe.
But markets also simply may be laying low early in the week as the Federal Open Market Committee swings into its two-day meeting Tuesday, with a rate policy decision due Wednesday followed by a press conference. The economic calendar is otherwise largely clear until Wednesday morning.
Apple Tests New Screens; Facebook Falls On Data Sharing
Nearly all of the Dow's 30 stocks traded lower at the open. Caterpillar (CAT) was down hardest, with a 1.3% decline. Caterpillar said it would close a parts plant with 200 employees in Waco, Texas by the end of the year. The company also said a diesel railroad engine plant with about 600 employees in LaGrange, Ill. was under review.
Tech leadership faced a squall of early selling. Apple news triggered selling among its supply-chain stocks, while Facebook dived more than 4% and Tesla narrowed its early loss t0 1.7%.
Apple opened down 0.8% after news reports said the company was, for the first time, making its own display screens. A secret site near the company's California headquarters was testing next-generation micro light-emitting diode, or LED, screens, according to Bloomberg. The device screens used a different light-emitting compound than organic LED displays, the report said, and were thinner, bright and more energy efficient.
Facebook slumped after revealing a company with ties to the 2016 Trump presidential campaign retained data from 50 million user accounts that should have been destroyed. The news launched a backlash over how the social media site handles its third-party data access. The New York Times reported lawmakers in the U.S. and Britain were demanding explanation for how a political contractor came to possess the data. The stock has been hugging its 10-week line in a six-week flat base.
Also among the FANG stock tech leaders, Google-parent Alphabet (GOOGL) is on watch, trading below an 1,198.10 buy point in a seven-week cup base. The stock also is fashioning a possible handle on that base, which could offer a much lower entry as early as Tuesday. Shares opened down 2% Monday.
Chip stocks felt some early pressure, particularly LED-related stocks on the Apple screens news. Apple supplier Universal Display (OLED) collapsed more than 9%. ON Semiconductor (ON) slipped 1.3%, Applied Materials (AMAT) dropped 2%.
Among IBD 50 names, chip inspection equipment maker Orbotech (ORBK) spiked 7% at the open, after KLA-Tencor (KLAC) agreed to acquire the Israel-based company for $3.4 billion. KLA said the deal should close before the end of the year, and generate $50 million in annual cost savings within 24 months. KLA shares slumped 2.9% in early trade. Orbotech ended Friday in a buy range, above a 57.19 buy point in a double-bottom base.
Two China-based names reported earnings early Monday. Canadian Solar (CSIQ), headquartered in Canada but with its operations in China, surged 7% after positive fourth-quarter results. China-based peer JinkoSolar (JKS) popped 5%, ahead of its fourth-quarter report, scheduled for Thursday. Both stocks have been in downtrends since November.
Cheetah Mobile (CMCM) jumped 5% after reporting a wide miss on earnings in its fourth quarter, but with above-target revenue and strong guidance. The volatile stock had triggered the automatic sell rule last week, diving more than 8% below a 13.30 buy point following an early January breakout.
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