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US open: Stocks mostly down as 'cult' stock Nvidia misses on revenue, again

By Iain Gilbert

Date: Friday 16 Nov 2018

US open: Stocks mostly down as 'cult' stock Nvidia misses on revenue, again

(Sharecast News) - US stocks opened mostly down on Friday as investors mulled over the latest developments in Sino-US relations, while disappointing earnings from chip maker Nvidia weighed on sentiment.
At 1505 GMT, the Dow Jones Industrial Average was up 0.05% to 25,300.78, while the S&P 500 had lost 0.05% to 2,728.81 as the Nasdaq, which was down as much as 1.1% in pre-market trading, traded 0.39% weaker at 7,233.01.

Relations between the US and China were firmly on investors' minds after a White House official told Reuters on Thursday that China's written response to US demands for trade reform was unlikely to lead to a deal in the near future.

In parallel, overnight US Commerce Secretary, Wilbur Ross, moved to temper expectations, reportedly saying that the most that could be expected to come out of the meeting between the US President and his Chinese counterpart, at the end of the month, was a framework for an understanding, but not a complete trade deal.

Meanwhile, investors were also keeping an eye on Brexit developments across the pond again, amid reports that Theresa May could face a vote of no confidence as early as Tuesday. Hardline Brexiteer Jacob Rees-Mogg submitted a letter of no-confidence in May as leader of the Tory Party on Thursday and it looked as though the 48-letter threshold needed to trigger a vote would be reached by the end of Friday.

On the corporate front, Nvidia crashed 16.8% after its third-quarter earnings missed on revenue for the fourth quarter in a row overnight.

Russ Mould, investment director at AJ Bell, said: "Cult, US-listed stock Nvidia, a firm often bracketed with the better-known FAANG stocks, has blown a massive fuse overnight and left growth-seeking momentum investors in an invidious position.

"The leading manufacturer of silicon chips has issued a big profit warning for the final quarter of its financial year (the three months to the end of January), citing indigestion in the video consoles market and also a slowdown in demand from makers of Bitcoin mining equipment.

"As a result, a stunning run of increases in quarterly sales and profits is about to come to a crashing end, with founder and chief executive Jensen Huang forecasting a 7% year-on-year drop in sales and a 28% year-on-year plunge in operating profit for the fourth quarter."

Elsewhere, Williams-Sonoma was down 12.10% in early trade after the retailer's third-quarter revenues missed expectations, while department store chain Nordstrom was down 11.68% after saying in its quarterly earnings that it wrote down $72m in credit card refunds to customers who were incorrectly charged higher interest rates.

On the upside, PG&E shares surged 38.56% at the bell following a report that a regulatory official told investors the agency does not want the utility to go into bankruptcy if it's found to have been responsible for this month's wildfire in northern California.

Sonos rallied 16.74% early on as the consumer electronics company's fourth-quarter earnings impressed investors.

Intel was was also up 1.06% after its board approved a $15bn share buyback, while Viacom was up just 0.19% after the release of its fourth-quarter numbers.

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