- The Dow Jones Industrial Average fell Monday, pulled lower by Boeing (BA) after the aerospace giant was downgraded and said it would slow production of its troubled 737 MAX aircraft following two fatal accidents.
- General Electric (GE) tumbled after the stock was downgraded by JPMorgan to underweight from neutral.
- Micron (MU) declined after analysts at Cowen downgraded the company’s stock to market perform from outperform.
Wall Street Overview
After a rough start, stocks ended up mixed Monday as investors reacted to downgrades of market heavyweights Boeing ( BA) and General Electric ( GE) and concerns about earnings reports as the season kicks off at the end of the week.
The Dow Jones Industrial Average, which fell 178 points at its low, finished down 84 points, or 0.32%, to 26,341, the S&P 500 rose 0.1%, while the Nasdaq was up 0.19%.
Eight S&P 500 companies are set to report this week, including three of the country’s biggest banks on Friday. Refinitiv estimated that first-quarter profits for the S&P 500 likely will fall by 2.2% from the first three months of 2018, with revenue sliding by around 5%.
TheStreet.com’s Jim Cramer, noting dire media warnings of an earnings season slowdown, said things may not be as bad as some people are saying. He advised investors to focus on the fundamentals.
“There’s a huge disconnect between stocks and their fundamentals right now, which tells you something else — or more specifically, many other things are hard at work here,” Cramer said.
In economic news, the U.S. Commerce Department said factory goods orders dropped 0.5%, pulled down by weak orders for machinery, transportation equipment and computers and electronic products. Data for January was revised down to show factory orders unchanged instead of edging up 0.1% as previously reported.
“The February factory orders report showed a 0.5% decline, while economists were expecting a drop of 0.6%, but the January report was revised from 0.1% to 0.0%,” said David Madden, a market analyst at CMC Markets U.K. “The report paints a picture of downbeat demand and doesn’t inspire confidence,” he added.
“Earnings season is about to kick off and major financial sector names report on Friday, which will deliver a strong pulse on the health of our economy,” said Chris Larkin, senior vice president for trading at E*Trade. “Let’s not forget it’s been a really strong start to the year, with all major indexes on a tear with double-digit returns, a far cry from how we ended 2018.”
Shares of Boeing sank 4.4% to $374.52 after Bank of America Merrill Lynch cut its rating on the planemaker to neutral from buy and Friday’s announcement that Boeing would slow production of its troubled 737 MAX aircraft following two fatal accidents that have raised serious concerns for the aircraft’s safety. Boeing cut 737 production by 20% to 42 units per month, starting around the middle of April.
Southwest Airlines (LUV) , which has more MAX 8 planes in its fleet than any other U.S. carrier, dropped 2.5% to $51.94 after Raymond James downgraded the airline to market perform from outperform.
General Electric shares fell 5.2% to $9.49 after JPMorgan analyst Stephen Tusa, a long-time critic of GE’s business model, lowered his rating for the industrial giant to underweight from neutral and cut his price target by $1 to $5 a share.
Micron (MU) fell nearly 1% to $42.90 after analysts at Cowen downgraded the stock to market perform from outperform while also lowering their price target to $45 from $46 per share. Analyst Karl Ackerman updated his outlook after field work he conducted suggested that Micron’s profitability will decline again in calendar 2020.
Online image-search company Pinterest said it would sell 75 million shares in its initial public offering at a price of $15 to $17 a share. The company, which begins its roadshow on Monday, is expected to list on the New York Stock Exchange next week under the symbol “PINS.”