Micron Shares Decline After Downgrade
On Monday, the shares of Micron Technology Inc. (MU, -4.14%) declined 4.3 percent in midday trading. This marked a 14-month low for the memory chip company. This slump came about as a result of a downgrade of Micron by Morgan Stanley to the lowest rating. According to Morgan Stanley, their research has shown that the seasonal strength expected from Micron will occur later and will also be a lot weaker than forecast. As a result of the decline, Micron became the poorest performer in terms of percentage on the S&P 500 index (SPX). Joseph Moore, an analyst from Morgan Stanley, cut his rating from equal rate to underweight. The rating of equal rate for Micron has been in place since the 8th of April 2013. Added to this, Moore also cut his stock price target for Micron from $30 to $21. Moore explained that they expected Micron to show improved earnings during the 3rd quarter as a result of content from Apple yet after doing the relevant checks, the positive impact and the seasonal lift will be delayed to at least the fourth quarter. Year to date, Micron’s stock has declined 31 percent while the S&P 500 index has gained 1.3 percent over the same period. Micron is currently trading at $24.24 a share.
In U.S. trading on Monday, U.S. stocks closed lower. This decline came in response to disappointing economic data as well as the collapse of talks over the weekend regarding the bailout plan for Greece. At the close of trading, the Dow Jones Industrial Average (DJIA) declined 0.6%, or 107.67 points, to 17,791.17. During the trading session, the blue chip index had dropped nearly 200 points in early trade. Also on the downside was the S&P 500 index (SPX) which dropped 0.5%, or 9.68 points, to close at 2,084.43 while the tech heavy Nasdaq Composite index (COMP) dropped 0.4%, or 21.13` points, to 5,029.97. In early trading, it seemed that U.S. stock futures were keeping pace with European equities. Unfortunately, European equities then fell sharply after talks between Greece and its international creditors collapsed over the weekend. This then prompted fears that Greece may default on its debts and potentially exit the euro zone.
In forex trading on Monday, the U.S. dollar (USD) pared gains. This came as a result of poor economic data out of the U.S. while hopes that interest rates will be increased by the Federal Reserve in the near future supported the greenback. According to the Fed, in May, industrial production declined by 0.2 percent. This missed expectations for a gain of 0.3%. Added to this, in April Industrial production declined 0.5 percent. In another report, the Federal Reserve Bank of New York stated that its general business conditions index fell from a reading of 3.1 in May to a reading of -2.0 in June. Again this missed expectations for an increase in June to 6.0. The EUR/USD traded at 1.1247, down 0.13% while the GBP/USD traded at 1.5541, down 0.10 percent. Against the currencies in Switzerland and Australia, the USD traded mixed with USD/CHF up 0.80% and trading at 0.9358 while the AUD/USD was up 0.58% and trading at 0.7775. Also, the U.S. dollar index was at 95.36, up 0.13%.
On Tuesday, crude oil prices traded flat to weaker in early Asian trade. This came as investors now turn their attention to the weekly report by the American Petroleum Institute which is expected to release the stockpile data of U.S. crude and refined products which was output last week. This will then be followed on Wednesday by the weekly report on the same by the Department of Energy. WTI crude for July delivery traded at $60.05 a barrel, down 0.03%, on the NYMEX. On Wednesday this week, the June WTI options will expire. Meanwhile, on Monday, Brent crude oil for July delivery traded at $63.90 a barrel, down 1.14%, or $0.74, on the Intercontinental Exchange (ICE) in London.