The Treasury market is closed today in observance of Veterans Day. The stock market, however, is open for trading and it is expected to start the session on a downbeat note.
The S&P futures are down five points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 35 points and are trading 0.7% below fair value. The Dow Jones Industrial Average futures are down 54 points and are trading 0.2% below fair value.
The futures market had been fading steadily from overnight highs, yet it experienced a notable downleg around 8:00 a.m. ET after Apple (AAPL) supplier Lumentum (LITE) cut its fiscal second quarter guidance sharply, saying one of its largest Industrial and Consumer customers for laser diodes for 3D sensing requested Lumentum materially reduce shipments to them for previously placed orders scheduled for delivery in Lumentum's fiscal second quarter.
Lumentum didn't name names, yet it is widely assumed that the customer in question is Apple, which accounted for 30% of Lumentum's fiscal 2018 net revenue.
That connection is creating a ripple effect across Apple supplier stocks. The spillover weakness will weigh on the broader market along with Apple, which is indicated 2.4% lower. Shares of LITE are down 25%.
This corporate news is causing a stir because it feeds into the market's concerns about a slowdown in global growth that will crimp earnings prospects.
It has overshadowed a spate of M&A deals this morning that has featured SAP's (SAP) $8 billion cash offer to acquire Qualtrics, which was slated to go public later this week, and word that athenahealth (ATHN) will be acquired for $5.7 billion in cash, or $135.00 per share, by Veritas Capital and Evergreen Coast Capital.
There hasn't been much other corporate news of note, yet Alibaba (BABA) is garnering increased attention after reporting gross merchandise volume on Singles Day increased 27% to a record $30.8 billion. Also, look for increased trading interest in the airline space after Goldman Sachs initiated coverage on a host of industry names.
Rising oil prices ($60.95, +$0.75, +1.2%) are another factor in play for the airline stocks.
The jump in crude futures has followed the news that Saudi Arabia will cut its oil exports by 500,000 barrels per day in December due to a seasonal slowdown in demand. Separately, Bloomberg reported that Saudi Arabia also thinks a 1 million barrel per day cut by oil producers from October production levels might be necessary.
This news has granted some reprieve for an oil market desperately in need of one. Crude prices had plummeted 21% at Friday's settlement from their October 3 high.
The energy sector, then, could be in line for an early boost that lends support to the broader market.
There won't be any economic data of note to key on today, yet that will change later in the week with the release of the Consumer Price Index (Wednesday), Retail Sales (Thursday), and Industrial Production (Friday) reports for October. Similarly, watch for important earnings reports later this week from leading retailers Home Depot (HD), Walmart (WMT), and Macy's (M) to create some added excitement.