If you hear that Morgan Stanley has put together a list of its top 5 ‘megacap’ stocks, you would definitely imagine that Apple Inc. (AAPL, +0.06%) would make it on this list. However on Monday, when analyst Adam Parker from Morgan Stanley released their top 5 list, the most valuable public company in the world didn't make the cut and in fact only come in at number 15. International Business Machines Corp. (IBM, -0.06%) was the only tech company who did make it together with J.P. Morgan Chase & Co. (JPM, -0.02%), Gilead Sciences Inc. (GILD, -0.11%), Bank of America Corp. (BAC, +0.25%) and Citigroup Inc. (C, +0.02%). According to Parker, based on their analysis, some of the worse stocks included Walt Disney Co. (DIS, -0.02%), Exxon Mobil Corp. (XOM, +0.02%) and Chevron Corp. (CVX, -0.02%). While Apple excels as being the most promising mega caps in the longer term, it failed in terms of implied growth rate. This was based on the consensus estimates for the next 3 fiscal years as well as the current stock price.. Another criterion analyzed by Morgan Stanley was the total return over the next 5 years. A formula based on dividend yield and price appreciation was used. As a result, Apple landed up near the bottom of the list while Facebook Inc. (FB, +0.14%) took first place.
In stocks trading on Monday, U.S. stocks looked set to gain but in the last 15 minutes of the trading session, these gains were erased. Analysts have attributed the volatility in the stock markets to the extreme fluctuations in the currency market and with the U.S. dollar rallying; questions regarding the actual profitability of corporations worldwide have now been raised. Also, as a result of a selloff of transportation stocks on Monday, the market felt the pressure with the Dow Transportation Average (DJT, -1.96%) declining two percent. At the close of trading, the Dow Jones Industrial Average (DJIA) declined 0.1%, or 11.61 points, at 18,116.04. More than half of the blue chip index’s thirty components ended with losses. Also on the downside was the S&P 500 index (SPX) which declined 0.2%, or 3.68 points, at 2,104.42 while the Nasdaq Composite index (COMP) dropped 0.3%, or 15.44 points, at 5,010.97. Losses in the tech heavy index were led by biotechnology stocks and the iShares Nasdaq Biotechnology (ETF IBB, -0.20%) declined 2.3 percent.
After rallying for the last few weeks, the U.S. dollar (USD) traded lower on Monday. This decline came after data showed that existing home sales in the U.S. in February increased yet missed expectations. Adding to the pressure on the greenback is uncertainty regarding when the Federal Reserve is likely to increase interest rates. In their report, the National Association of Realtors reported that existing home sales in February increased to 4.88 million units last month, up 1.2% yet missing expectations for an increase to 4.90 million units in February, up 1.7%. In January, existing home sales was at 4.82 million. In forex trading, the euro traded higher against the USD with EUR/USD up 1.04% and trading at 1.0932. Meanwhile, the yen and the Swiss franc traded higher with USD/JPY trading at 119.65, down 0.32%, and with USD/CHF down 0.74% at 0.9675. The USD traded stronger against the British pound with GBP/USD down 0.22% at 1.4921 while the U.S. dollar index was at 97.49, down 0.58%.
Oil prices just can’t seem to catch a break and events on Monday pushed the commodity price down again. This came after data showed that the flash HSBC/Markit PMI (Purchasing Managers' Index) in China declined in March to 49.2. Since this is below the 50-point level, it is an indication of contraction and not growth. Adding to this, an overnight report showed that Saudi Arabia is currently pumping 10 million barrels of crude oil per day. This number is an all-time high and it is also 350,000 bpd above the figure that the main OPEC member provided to OPEC for output in February. As a result, U.S. WTI crude oil traded at $46.97 a barrel, down 48 cents while Brent crude oil futures traded at $55.58 a barrel, down 34 cents.