Stocks traded on the defensive on Tuesday after a long holiday weekend as Apple announced that forecast guidance would miss expectations due to the coronavirus. The lack of industrial production in China has stalled phone production. In addition, consumer spending in China has come to a standstill due to the spread of the virus. Share buybacks in the US declined to the slowest pace since 2012. Wal-Mart reported lower than expected same-store sales. Most sectors in the S&P 500 index were lower on Tuesday led down by Energy and Financials, Utilities bucked the trend. Macy’s shares tumbled 3% as S&P cut its credit rating to junk.
Companies are holding off on additional purchases likely due to the fact that stock prices are near all-time highs. Share buybacks have gotten off to a slow start in 2020. Companies in January announced just $13.7 billion of repurchases, the slowest opener since 2013 and coming off 2019 that saw a 30% drop-off from the previous.
Oil Prices Declines Generate Cuts in Capital Spending
The Dallas Federal Reserve announced that the region should expect that the oil and gas sector will cut capital spending by 10% to 15% in 2020. The Fed district expects the decline in oil production growth will have a substantial impact on the energy service companies. U.S. oil production is expected to grow by 700,000 barrels a day from fourth-quarter 2019 to fourth quarter 2020. The forecast assumes a decline of 700,000 barrels a day in non-OPEC production and a drop of the same level by OPEC.
Walmart reported that same-store comparable sales, those from stores and digital channels operating for at least 12 months, increased 1.9% in the fourth quarter, a slowdown compared with the 4.2% growth the company reported for the same period last year. Walmart’s U.S. e-commerce sales rose 35% in the fourth quarter, boosted by online grocery orders.
This article was originally posted on FX Empire
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