Dow Jones futures turned lower early Tuesday, along with S&P 500 futures and Nasdaq futures, as Dow Jones giants Apple stock and Boeing stock continued to slide. The stock market rally pulled back Monday within its recent range, still awaiting President Donald Trump's China trade war decision on Dec. 15 tariffs. MongoDB (MDB), Stitch Fix (SFIX) and Toll Brothers (TOL) reported earnings late, while AutoZone (AZO) released results Tuesday.
XOvernight, Apple (AAPL) continued to modestly outpace market losses, trading down 0.9%. Boeing (BA) fell after a former manager said he warned the aerospace giant about 737 Max problems before the two crashes that killed 346 people. MongoDB stock and Stitch Fix stock rose sharply overnight. Regeneron Pharmaceuticals (REGN) tumbled after reports said French drug partner Sanofi (SNY) may sell its stake in the biotech giant.
AutoZone stock signaled a gap-up above a buy point. Toll Brothers stock was up and down after closing near a buy point.
Dow Jones Futures Today
Dow Jones futures fell 0.5% vs. fair value, while S&P 500 futures sank 0.4%. Nasdaq 100 futures retreated 0.55%. Apple stock is a member of the Dow Jones industrials, S&P 500 and Nasdaq. Boeing stock is the biggest weight in the priced-weighted Dow Jones Industrial Average.
Dow Jones futures had traded slightly higher Monday night before retreating.
In addition to the China trade war decision, investors await the Federal Reserve, European Central Bank and the U.K. election this week. The Fed meeting begins today, with policymakers expected to stay the course in their Wednesday announcement.
Remember that overnight action in Dow futures, MongoDB stock and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Current Stock Market Rally
The current stock market rally had a down session Monday, as investors turned cautious ahead of the Dec. 15 China tariffs decision. The Dow Jones Industrial Average and Nasdaq composite fell 0.4% with the S&P 500 index off 0.3%. Apple stock fell 1.4%, weighing on the Dow industrials and other big-cap indexes.
The Dow Jones today remains within 1% of its all-time high, along with the S&P 500 and Nasdaq. The stock market rally has been pausing for the past few weeks after running up for several weeks. Apple stock had rallied 5.6% from Tuesday's intraday low to Friday's close, hitting a new high. With the China trade tariffs decision still unclear, it's not surprising the S&P 500 and Apple would take another breather.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.4%. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.7%.
Trump's China Trade War Options
President Trump announced a "phase one" China trade deal back in October, but the terms have never been finalized. Trump could reach an interim China trade deal this week that would head off the Dec. 15 tariffs or he could let those 15% tariffs go into effect. A third option, perhaps the most likely, is to extend a China trade war truce, not hiking tariffs while talks continue.
Boeing 737 Max Warnings
Ed Pierson, a former Boeing manager, told NBC News on Monday that he warned executives about the Renton, Wash., plant where the Boeing 737 Max was being assembled, before the two fatal crashes. He said that a push to increase 737 Max production created a factory in "chaos." Pierson is set to testify before Congress about his Boeing 737 Max concerns later this week.
It's the latest report suggesting that Boeing pushed production speed ahead of safety, as the company seeks to win FAA approval to resume Boeing 737 Max flights.
Boeing stock fell 0.6% early Tuesday. Shares fell 0.8% on Monday, below their 50-day and 200-day lines.
MongoDB Earnings
MongoDB lost 26 cents a share adjusted while revenue grew 52.5% to $109.44 million. Both beat views. The database software maker also guided higher for Q4.
MongoDB stock jumped 7% in the premarket, signaling a move to about its 200-day line. Shares dipped 0.1% to 131.01 on Monday, closing just below their 50-day average line.
AutoZone Earnings
AutoZone earnings came in at $14.30 a share as revenue climbed 5.7% to $2.79 billion, with U.S. same-store sales up 3.4%. Analysts expected AutoZone earnings of $13.69 on revenue of $2.761 billion.
AutoZone stock jumped 6.1% to 1,240 before the open. That signals a move above a 1,186.70 buy point from a flat base.
Stitch Fix Earnings
Stitch Fix earnings came in at break-even vs. views for a 6-cent loss for the online clothing personal styling service. Revenue climbed 21% to $444.82 million, also topping.
Stitch Fix stock leapt 12% before Tuesday's open. Shares rose 3.9% on Monday to 25.02, reclaiming the 200-day line for the first time since late July. If Stitch Fix stock can form a bottoming base above its 200-day line, investors could start to take another look at this once-hot 2017 IPO.
Sanofi May Sell Regeneron Stock Stake
French drug giant Sanofi reportedly is considering its 21.6% Regeneron stock stake. Sanofi has had a long alliance with the U.S. biotech, but is increasing its focus on cancer treatments. Early Monday, Sanofi agreed to pay $2.5 billion for immuno-oncology firm Synthorx (THOR).
Regeneron stock fell 2.5% in extended trading. Shares sank 1.8% Monday to 365.83. Regeneron stock is working on the right side of a nine-month, 39%-deep cup base, according to Marketsmith.
Sanofi stock rose 4.3% before the open.
Toll Brothers Earnings
Toll Brothers earnings fell 32% to $1.41 a share as fiscal Q4 revenue dipped 3% to $2.379 billion. Analysts expected Toll Brothers earnings to slide to $1.29 a share with sales down to $2.175 billion.
The entry-luxury homebuilder sees stronger demand in the current Q4.
Toll Brothers stock fell 1% to 41 in the premarket. Shares rose 1.3% to 41.42 on Monday. Toll Brothers stock has a 41.80 flat-base buy point overnight, but reversed to trade down 1%.
Stock Market Rally Rangebound, For Now
Until President Trump offers clarity on whether he'll escalate the China trade war on Dec. 15, the stock market is likely to remain in its recent range. Monday's modest retreat and Tuesday's Dow futures retreat hasn't changed that.
How much has the stock market rally priced in the Dec. 15 tariffs? The Dow Jones industrials, Apple stock and the broader market are likely to retreat if the tariffs go into effect or rally if the China trade war truce continues. But by how much?
If the stock market rally can hold above last Tuesday's lows, or at least above prior market peaks, that would be a bullish sign. The 50-day line has rallied to even or slightly higher than prior highs for the Dow Jones industrials, S&P 500 index and Nasdaq composite. So that support area could be especially significant in the coming weeks.
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