Monday was the last trading day of 2018 and even though markets posted solid gains for the day, the S&P 500 ended the year down 6.2% and the Dow Industrials ended the year down 5.6%, their biggest annual losses since 2008. West Texas Intermediate crude finished at $45.41 a barrel and the yield on 10-year Treasuries fell slightly to 2.68%.
On Tuesday markets were closed for the New Year’s holiday and on Wednesday the PMI manufacturing index for December declined 1.5 points to 53.8, a 15 month low. In addition, China’s Markit PMI manufacturing index showed the Chinese economy contracting for the first time in 19 months. This prompted a market selloff with the Dow Industrials declining almost 400 points, however, by the end of the day markets recovered and closed slightly higher.
On Thursday the ADP employment report saw private payroll grow 271,000, much higher than expected and jobless claims for the week ending December 29th rose 10,000 to 231,000. The ISM manufacturing index for December fell 5.2 points to 54.1, its lowest level since 2008. A pessimistic revenue warning issued by Apple the prior evening spooked markets and the Dow Industrials closed 660 points lower while the Nasdaq Composite lost 3%. Ten-year Treasuries fell on the news to yield 2.56%.
On Friday nonfarm payrolls for December came in at 312,000, much higher than expectations and the unemployment rate rose .2% to 3.9%. Average hourly earnings rose .4%. In addition Fed Chair Jay Powell also reassured investors by stating the Fed will monitor economic numbers and adjust policy as necessary if the economy slows. Markets soared at the open on the news. Now let’s take a look at some stocks.
Tesla, Inc. (NASDAQ: TSLA) shares fell by over 8% on Wednesday morning after the electric automaker reported on Tuesday less than expected Model 3 deliveries in the fourth quarter. Tesla delivered 63,150 Model 3s in the quarter, lower than estimates of 64,900. Tesla shares fell below $300 on Thursday.
Apple Inc. (NASDAQ: AAPL) shares plummeted on Wednesday during after-hours when Chief Executive Officer Tim Cook slashed the Company’s first quarter revenue guidance. Trading was halted briefly after shares fell as much as 9%. Cook said in the letter to investors that Apple now expects revenue of approximately $84 billion compared to its previous guidance of $89-93 billion. Cook also said the lowered revenue expectations are primarily due to economic weakness in greater China.
Celgene Corporation (NASDAQ: CELG) shares skyrocketed 26% on Thursday after Bristol-Myers Squibb Company announced that it will acquire the biotechnology company in a transaction valued at approximately $74 billion. Bristol-Myers is expected to own approximately 69% of Celgene, while Celgene maintains the remaining 31%.
Delta Air Lines, Inc. (NYSE: DAL) shares slipped by 10% on Thursday after the Company forecast slightly lower revenue growth in its December update. The airline projects total unit revenue to rise about 3%, compared to its previous forecast of 3.5%, while total revenue is expected to increase by approximately 7% year over year.
General Motors Company (NYSE: GM) shares fell by 3.2% on Thursday after the automaker reported its 2018 vehicle delivery results. The company reported that fourth-quarter sales fell by 2.7%, with declines across its Chevrolet, Cadillac and Buick brands. As for the full year, General Motors reported total vehicle deliveries of 2.95 million, which fell by 1.6% year over year. The weaker than expected deliveries was driven by declines among the Company’s popular models.