Stocks Mixed As The Chip Shortage Undercuts Apple And Its Suppliers

Rich Asplund - Barchart - Wed Oct 13, 9:21AM CDT

What you need to know…

The S&P 500 Index ($SPX) (SPY) this morning is down -0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.45%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.36%.

U.S stock indexes this morning are mixed. Weakness in Apple and its suppliers is weighing on the overall market after Bloomberg reported that Apple might cut its iPhone 13 production targets for this year due to chip shortages. U.S stock indexes were also under pressure after U.S. Sep consumer prices rose more than expected. Strength in U.S.-listed Chinese technology stocks is keeping the Nasdaq 100 in positive territory.

U.S. Sep CPI rose +0.4% m/m and +5.4% y/y, slightly stronger than expectations of +0.3% m/m and +5.3% y/y. Sep CPI ex-food & energy rose +0.2% m/m and +4.0% y/y, right on expectations.

Today’s stock movers…

Strength in U.S.-listed Chinese technology companies is positive for the overall market today. Pinduoduo (PDD) is up more than +5% to lead gainers in the Nasdaq 100. JD.com (JD) is up more than +2%, and Baidu (BIDU) is up nearly +2%.

Blackrock (BLK) is up more than +2% today after it reported Q3 adjusted EPS of $10.95, better than the consensus of $9.39.

Qualcomm (QCOM) is up nearly +2% today after it announced a $10.0 billion stock buyback.

Apple (AAPL) is down -1% today after Bloomberg reported that Apple is likely to cut its projected iPhone 13 production target for 2021 by as many as 10 million units due to prolonged chip shortages. Apple suppliers Skyworks Solutions (SWKS) and Cirrus Logic (CRUS) also fell more than -1% today on the news.

Delta Air Lines (DAL) is down -3% today after the company warned that rising fuel costs pose a threat to its profitability.

Monster Beverage (MNST) is down more than -2% today after Jeffries cut its recommendation on the stock to hold from buy, citing “worrisome” U.S. market share losses.

Across the markets…

Dec T-notes (ZNZ21) this morning are up +4 ticks, and the 10-year T-note yield is down -2.8 bp at 1.549%. T-notes are slightly higher today on carry-over support from a rally in European government bonds. Gains were limited after U.S. Sep consumer prices rose more than expected, which is hawkish for Fed policy. Also, supply pressures are bearish for T-notes as the Treasury will auction $24 billion of 30-year T-bonds later today.

The dollar index (DXY00) this morning is down -0.19%. The dollar is falling back from Tuesday’s 1-year high as lower T-note yields today have sparked long liquidation in the dollar. Losses in the dollar are limited as today’s data that showed a faster-than-expected increase in U.S. Sep consumer prices might push the Fed to begin tapering QE sooner than expected.

EUR/USD (^EURUSD) is up +0.30%. The euro is moderately higher today as a weaker dollar has sparked short-covering in the euro as it recovers slightly from Tuesday’s 14-1/2 month low. Further upside in EUR/USD may be limited after Reuters reported today that Germany's economic institutes would cut their German 2021 GDP estimate to 2.4% from 3.7% as bottlenecks in the supply chain crimp the recovery.

USD/JPY (^USDJPY) is down -0.12% as it falls back from a new 2-3/4 year high. The yen strengthened today on increased safe-haven demand after Japanese stocks declined. USD/JPY initially posted a new 2-3/4 year high today as the yen weakened after Japan Aug core machine orders unexpectedly fell -2.4% m/m, weaker than expectations of +1.4% m/m and the biggest decline in 6 months.

December gold (GCZ21) this morning is up +20.9 (+1.19%), and Dec silver (SIZ21) is up +0.466 (+2.07%). Precious metals this morning are moderately higher. A weaker dollar and lower T-note yields today are bullish for precious metals prices. Gold also has support on increased demand as a hedge against inflation after U.S. Sep consumer prices rose more than expected.
Stocks Mixed As The Chip Shortage Undercuts Apple And Its Suppliers (barchart.com)