The market opened under pressure and things have only gotten worse since news that Johnson & Johnson (JNJ) may have been selling its famous baby powder knowing that it contained traces of asbestos.  Shares of the stock are down more than 10% and the S&P Healthcare sector is by far the biggest loser of the session.

Tech is also taking it on the chin, led by Adobe (ADBE) on the downside after posting results that saw a big decline in operating margins and DA Davidson joins the herd lowering its target on Apple (AAPL).  I don’t think there are any firms left to downgrade the stock or target.

On that note, however, while there are a lot more stock downgrades than normal, I’m also seeing lots of stocks being defending. 

• Starbucks (SBUX) at Wells Fargo
• Delta (DAL) at Cowen
• Ford (F) and General Motors (GM) at Deutsche Bank, who says there’s “large upside potential”

Retail Sales Highlights

I love the surge in furniture and think department stores and sporting goods are encouraging.  I was negatively surprised by restaurants, while the internet is on fire. 

Shares of Costco Wholesale Corp. (COST) are trading lower after the retail giant reported first-quarter earnings that disappointed the Street. . COST reported earnings of $1.61 per share, missing estimates by $0.01. Revenue of $35.07 billion was 10.3% better than a year ago and beat consensus by $360 million.

Comparable store sales +7.5% overall

• 8.3% in the U.S.
• 5.5% in Canada
• 5.8% Internationally

 E-commerce sales are lower margin sales, which may have affected operating margin also. Fresh foods were mentioned as pressuring margins due to competitive pressure. The company mentioned tariffs have had very little impact on sales, but they purchased certain additional seasonal merchandise ahead of the anticipated January 1st additional tariff deadline.

We began the week focused on key support and we are ending the week focused on key support points holding up. That said, this was a good week that saw resolve and resistance but not enough to seduce buyers off the sidelines.