Watching the Consumer: Big Box Earnings, iPhone Sales Weighing on Market

U.S. stocks look to be poised for another down day after worries about iPhone sales helped lead a tech selloff yesterday that appeared to taint sentiment.
5 min read

Key Takeaways

  • Worries about iPhone sales continue

  • Global dividends rose to a record in Q3

  • Homebuilder index comes in under expectations

(Tuesday Market Open) The iPhone is a relatively small device, but worries about it seem to be creating big ripples in the stock market. Meanwhile, earnings news from big box retailers also seem to be weighing on the market this morning as fresh housing data came in mixed.

U.S. stocks look to be poised for another down day after worries about iPhone sales helped lead a tech selloff yesterday that appeared to taint sentiment. The Wall Street Journal reported yesterday that Apple (AAPL) has cut production orders for the three new iPhones it unveiled in September. 

Apple, Tech and the Consumer

AAPL is a widely held stock with a very large market capitalization, so it can help dictate wider market sentiment. Plus, there are a host of companies that supply the tech giant, as well as those who sell their devices at the retail level, meaning that sometimes, as Apple goes, so goes the market. 

Yesterday, the U.S. stock market opened a Thanksgiving-shortened week with plenty of red to go around. Tech short sellers in particular seemed to have something to be thankful for as the tech heavy Nasdaq Composite (COMP) declined more than 3%, roughly double the fall in the S&P 500 (SPX) and Dow Jones Industrial Average ($DJI).

The drubbing continued this morning with not just AAPL but all of the FAANG stocks — Facebook (FB), AAPL, Amazon (AMZN), Netflix (NFLX), and Alphabet’s (GOOG, GOOGL) Google — down in premarket trading alongside chipmakers as the negative momentum kept up.

The selling appears to be part of a repricing of stocks as market participants weigh the possibility of U.S. tariffs on China rising to 25% if the world’s two largest economies don’t reach a resolution in a lingering trade dispute that has led some market participants to worry about global economic growth.

Over the weekend, Vice President Mike Pence in tough talk on trade seemed to throw cold water on hopes for a deal. While Pence’s comments could be a negotiating tactic — especially as they come after President Donald Trump saying he might not tack on additional tariffs to Chinese goods — for the moment they appear to be spooking investors in the tech sector as many of those companies rely on a supply chain linking the U.S. and China.  

Another ongoing geopolitical situation investors appear to be keeping an eye on is Brexit. A “hard” Brexit without an agreement in place could be a worst-case scenario that could pose challenges for the European economy in a way that might be avoided with a deal in place. 

Windows Into the Housing Market

Although this week’s data calendar is fairly light overall, it’s a veritable full house when it comes to housing market data. 

This morning, October housing starts came in slightly under expectations while building permits were a bit stronger than 3rd-party consensus, according to On Wednesday, a fresh snapshot on existing home sales and a mortgage applications index are due to be released. 

When you consider the recent volatility among home builder stocks, plus the weaker guidance offered by DIY giant Home Depot (HD) when it released earnings last week, this week’s housing data may be worth watching. This morning, HD competitor Lowe’s (LOW) reported revenue and adjusted earnings per share that beat expectations, but it lowered its sales forecast for the year and its shares were down more than 6% in premarket trading. 

Apparently contributing to negative market sentiment yesterday was November’s National Association of Home Builders/Wells Fargo Housing Market Index, which came in at 60, well under the consensus expectation of 68. Home builders are facing higher costs for labor, land, and commodities. And rising interest rates that are increasing mortgage costs, perhaps causing some potential home buyers to shy away.

A decade ago, as the great recession unfolded, the housing market was arguably ground zero. While we find ourselves in a very different world today, with a very different set of lending standards, the housing market is still “one to watch,” as home spending and home equity tend to help drive consumption.

In corporate news tied to consumers, the latest results from Target (TGT) seemed to weigh on sentiment this morning as the retailer reported lower-than-forecast earnings.Its shares fell over 9% on the news. Meanwhile, it was a different story with Kohl’s (KSS), where net income beat expectations. Still, KSS shares were down around 11% in premarket trading. Although KSS raised its adjusted earnings per share guidance, investors apparently had been hoping for more.

Perhaps not a Panic

If you’re the type of person who likes to see the brighter side of things, drink from glasses that are half full, and look for silver linings, then a takeaway from Monday’s U.S. stock market could be that the selling didn’t appear to be panic selling.

Although yields on government bonds fell, there wasn’t a complete melt down there, as you might expect if panicked traders were buying bonds hand over fist. Still, while the stock selling seemed orderly, it was not inconsequential. And with stocks dropping, it’s perhaps not surprising that Wall Street’s main fear gauge, the Cboe Volatility Index gained ground, indicating investors expect increased volatility.

Volume was on the light side in trading in SPX and COMP companies. Light volume can often exacerbate moves up or down. 

Figure 1: Home Builders Struggle. Home builders have been on the decline recently, as shown by the S&P Homebuilders Select Industry Index ($SPSIHO), as they face higher costs for labor, land, and commodities. And rising interest rates that are increasing mortgage costs, perhaps causing some potential home buyers to shy away, or to come to market with less buying power. Data Source: S&P Dow Jones Indices Chart source: The thinkorswim® platform from TD AmeritradeFor illustrative purposes only. Past performance does not guarantee future results.  

Slow Overseas Growth and U.S. Inflation Eyed: Looking back at recent Fed comments, which arguably sounded a little more dovish, a couple of factors come to mind. First there’s this month’s rally in the dollar, which tends to move higher when the Fed tightens rates and could be one factor behind Europe’s recent woes. Another thought is that inflation here at home just doesn’t seem too frightening. Core consumer prices rose 2.1% year-over-year in October, the government said earlier this week. That was actually down from September. Meanwhile, the last Personal Consumption Expenditures (PCE) price index, which the Fed watches closely, showed core inflation holding steady at 2%. The next PCE data is due the week after Thanksgiving, and investors might want to consider giving it a close look for any sign of change. As for the dollar index, it drew back slightly early this week to 96.21, well below last week’s highs above 97.50.

Global Dividends Hit Record: Global dividends rose to a record in Q3 as continued strength in the world economy boosted corporate profitability, according to a report based on the latest Janus Henderson Global Dividend Index. The latest quarterly study showed that headline global payouts rose 5.1% to a Q3 record of $354.2 billion. In the United States, headline dividends rose 9.1% to an all-time record $120 billion. Payouts in Canada, Taiwan and India also hit records. Meanwhile, in China, dividends returned to growth. Janus Henderson is forecasting headline growth in dividends of 8.5% for 2018, bringing the total amount of payouts to $1.359 trillion. 

According to Ben Lofthouse, head of global equity income at Janus Henderson, “2018 may be a volatile and more challenging year for stock markets, but steady profit growth means dividends should continue to make steady progress.” However, the pace of corporate profit expansion may be slower next year than previously thought given the late stage of the economic cycle, he said. Still, “growing profits and strong cash flow mean that dividends should continue to be well supported, and so investors seeking an income from their shares should feel confident about the year ahead.” 

Good Trading, 



Helpful Educational Content and Programming

  • Check out all of our upcoming Webcasts or watch one of the many archived ones, covering a wide range of topics from market commentary to portfolio planning basics to trading strategies for active investors. No matter your experience level, there’s something for everybody.
  • Looking to stay on top of the markets? Check out the TD Ameritrade Network, which is live programming that brings you market news and helps you hone your trading knowledge 

The TD Ameritrade Network is brought to you by TD Ameritrade Media Productions Company. TD Ameritrade Media Productions Company and TD Ameritrade, Inc. are separate but affiliated subsidiaries of TD Ameritrade Holding Corporation.                                                                       

Economic calendar for this week. Source:

Key Takeaways

  • Worries about iPhone sales continue

  • Global dividends rose to a record in Q3

  • Homebuilder index comes in under expectations

Call Us

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.  

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold..

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.

Scroll to Top