By Peter Nurse
Investing.com - U.S. stocks are set to open sharply lower Tuesday, as investors return from a holiday to the shock news from tech giant Apple (NASDAQ:AAPL) that it wouldn’t meet its March quarter sales guidance set just three weeks ago due to the ongoing coronavirus outbreak in China.
At 7:00 AM ET (1200 GMT), futures for the S&P 500 traded 0.5% lower, futures for the Nasdaq were down 0.8%, while the Dow Jones futures contract lost 0.6%. U.S. equity markets were closed Monday for the Presidents Day holiday.
Apple (NASDAQ:AAPL), the world's most valuable technology firm, said earlier Tuesday that it would not meet the revenue guidance, provided in late January, for the second quarter due to work slowdowns and lower demand due to the outbreak of Covid-19 in China.
Apple (NASDAQ:AAPL) was expected to be hard hit, given how much of its supply chain and consumer market are in China. But it didn’t update its sales guidance of between $63 and $67 billion, reflecting a high degree of uncertainty that spooked investors.
“As production in China is ramped up more slowly than previously anticipated and the effects on the global tech supply chain become evident, equity investors might have to brace themselves for more negative news,” said analysts at Danske Bank, in a research note.
In China earlier Tuesday, the death toll from the virus climbed to 1,868, including one of the most senior doctors in the Wuhan region where the virus was first detected , The number of people infected topped 73,000.
Moody’s has downgraded its growth forecast for China in 2020 to 5.2%, from 5.8% previously, due to the outbreak.
Elsewhere, asset manager Legg Mason (NYSE:LM) will be in focus after the WSJ reported that Franklin Resources (NYSE:BEN) is in talks to buy its rival. Legg Mason has a market value of more than $3.5 billion and has assets under management of $800 billion.
In earnings news, Walmart (NYSE:WMT) disappointed with its earnings and revenue numbers for the holiday quarter, and its guidance also came in below expectations. Expectations were low after rival Target (NYSE:TGT) disappointed over the same period, but Walmart stock still traded 1% lower premarket.
Oil markets have sold off again Tuesday as China's extended travel restrictions point to a sustained drop in demand.
AT 07:00 AM ET (1200 GMT), U.S. crude futures traded 1.8% lower at $51.36 a barrel. The international benchmark Brent contract fell 2.1% to $56.48.
Additionally, gold futures rose 0.3% to $1,590.95/oz, while EUR/USD traded at $1.0872, just above the $1.0825 overnight low, just off its lowest level for over two years.