Stocks opened in negative territory and have remained there throughout the morning. The weakness was attributed to an earnings miss from Caterpillar (CAT) and revenue shortfall warning from Nvidia (NVDA). The market breifly moved off its lows, but then resumed its downtrend and the major averages are near their worst levels at noon. Oil prices are also sharply lower following some weak industrial data out of China.
ECONOMIC EVENTS: In the U.S., the Chicago Fed's National Activity Index rose 0.06 points to 0.27 in December. The Dallas Fed's manufacturing index bounced 6.1 points to 1.0 in January.
In China, industrial profits for December declined 1.9% year-over-year, which was about in-line with the 1.8% drop seen in November.
COMPANY NEWS: Shares of Nvidia have plunged 14% after the chipmaker cut its guidance for the fourth quarter, citing weaker than expected sales in its Gaming and Datacenter segments. Gaming chipmaking peer AMD (AMD) have declined 6% in sympathy following Nvidia's warning.
Caterpillar shares are down 10% after the heavy equipment giant reported lower than expected sales and profit for the last quarter of 2018, stating that its outlook for 2019 "assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment."
Shares of Vale SA (VALE) are under pressure again today following Friday's weakness after the company announced the suspension of its dividends as it braces for the financial fallout of a dam breach that has left at least 60 people dead and almost 300 missing in Brazil. Following the fatal disaster, several Wall Street analysts downgraded the stock to Neutral-equivalent ratings as they see the dam break being an overhang on the shares for an extended period.
Howard Schultz, the former CEO of Starbucks (SBUX), announced on Sunday that he is seriously considering running for president as a centrist independent. In response, President Donald Trump tweeted that "Schultz doesn't have the 'guts' to run for President! Watched him on @60Minutes last night and I agree with him that he is not the 'smartest person.' Besides, America already has that! I only hope that Starbucks is still paying me their rent in Trump Tower!"
MAJOR MOVERS: Among the noteworthy gainers were Versum Materials (VSM) and Entegris (ENTG), which rose a respective 16% and 7% after the companies agreed to combine in a $9B merger of equals. Also higher was PG&E (PCG), which gained 4.5% after Bloomberg reported that two different investor groups have offered the company alternative plans to avert bankruptcy. Additionally, the California Public Utilities Commissions said it will hold an emergency voting meeting today to address a PG&E request for an exemption that the company said is needed prior to January 29, when the company expects to make a filing for Chapter 11 bankruptcy reorganization.
Among the notable losers was Guess (GES), which dropped 17% after announcing the departure of CEO Victor Herrero. Also lower was AK Steel (AKS), which fell 5.5% after Morgan Stanley analyst Piyush Sood downgraded the stock to Equal Weight from Overweight, citing his view that automakers "likely gained an upper hand" in 2019 pricing negotiations.
INDEXES: Near midday, the Dow was down 389.76, or 1.58%, to 24,347.44, the Nasdaq was down 124.96, or 1.74%, to 7,039.90, and the S&P 500 was down 38.29, or 1.44%, to 2,626.47.
