By Geoffrey Smith
Investing.com -- U.S. stock markets fell at the opening on Tuesday, as a warning from Apple and disappointing figures from Walmart (NYSE:WMT) validated fears that stocks may have gotten ahead of themselves in pricing in a quick end to the Covid-19 outbreak.
Apple (NASDAQ:AAPL) stock fell 2.7% after the iPhone maker warned of a two-fold hit to revenue, first from a drop in retail sales in China and secondly due to production constraints in its supply chain. It wasn’t able to give any clearer update on the expected impact of the virus, but warned it would not reach the $63 billion lower end of its guidance range.
Walmart (NYSE:WMT) stock, by contrast, recovered from early losses to be up 0.5% after missing expectations for fourth-quarter sales. While its guidance for 30% online sales growth also represented a slowdown from last year’s 37%, markets took the view that the possible leakage of business to Amazon.com (NASDAQ:AMZN) isn’t as bad as it might be.
By 9:55 AM ET (1455 GMT), the Dow Jones Industrial Average was down 113 points or 0.4% at 29,303. The S&P 500 index was down 0.2% and the Nasdaq Composite was down 0.1%.
Sentiment was supported somewhat by the release of the Empire State Manufacturing index, which rose by more than expected to its highest level since May last year.
Among the biggest gainers was Richard Branson’s Virgin Galactic, which rose 12.6% to a new record high of $32.20. It’s now tripled since its IPO last year, and has doubled since the middle of January, when fears about the Covid-19 outbreak began to weigh on the broader market.
The company hasn’t released any financials in that time, suggesting that the rally is in large part stoked by speculative interest looking for a growth story to rival Tesla (NASDAQ:TSLA).
Tesla (NASDAQ:TSLA) stock was up another 7.0%, approaching the peak of last week’s spike, helped by a Reuters report that it is in talks with China’s CATL to use cobalt-free batteries in the cars made at its new factory in Shanghai.
Theoretically, taking cobalt out of the value chain could cut production costs. However, Reuters also cited a source as saying it has no plans to abandon the use of its current nickel-cobalt-aluminum battery technology.
Elsewhere, Franklin Resources (NYSE:BEN) stock rose 7.6% and Legg Mason stock rose 23.6% after the two companies agreed to combine in a deal that values the latter at around $4.5 billion.
Oil and gas stocks again came under pressure after U.S. crude futures snapped their winning streak, losing 0.9% to $51.83 a barrel amidst lingering concerns about the travel restrictions still in force in China, and Russia’s refusal – so far – to sign up to deeper production cuts along with OPEC.
Gold futures rose 0.6% to $1,595.65 an ounce while the dollar rose ever higher after the euro zone ducked a challenge to coordinate fiscal stimulus for its struggling economy. The dollar index briefly touched its highest in 33 months before retracing to 99.198, still a gain of 0.2% on the day.