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Sunday, April 5, 2020
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US stocks edges up, led by energy shares

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The S&P 500 and Dow Jones industrial average moved higher on Tuesday, backed by the energy stocks and reports of March-quarter earnings that topped the modest expectations of the economists but did minimal to lower the concerns about the strong US dollar.

Shares of Chevron, Exxon Mobil and other energy firms followed crude higher after a forecast that May’s US shale oil output would record its first monthly fall in over four years. The S&P 500 energy index surged 1.95 percent.

Johnson & Johnson slashed its full-year forecast on the grounds of the impact of a strong greenback, even though the adjusted earnings topped the expectations. The shares of the Dow component gained 0.29 percent.

Tim Ghriskey, chief investment officer at New York-based Solaris Group, said, “Expectations are low, primarily because of economic weakness during the first quarter related to weather, the strong dollar, the West Coast dock strike and oil prices.”

At 1:02 pm, the S&P 500 edged up 3.42 points, or 0.16 percent, to 2,095.85 and the Dow Jones industrial average surged 78.46 points, or 0.44 percent, to 18,055.5. The Nasdaq Composite declined 15.63 points, or 0.31 percent, to 4,972.62.

The shares of Chevron jumped 1.97 percent, while Exxon’s shares increased 2.22 percent.

The shares of Alcatel increased 12.18 percent to USD 4.88, while the US shares of Nokia dropped 4.21 percent to USD 7.95.

On the NYSE, the advancing issues outnumbered the declining ones by 1,842 to 1,099, for a 1.68-to-1 ratio. 1,404 issues dropped and 1,211 advanced, for a 1.16-to-1 ratio favoring decliners on the Nasdaq.

The S&P 500 was recording three new 52-week highs and no new lows. On the other hand, the Nasdaq Composite was posting 57 new highs and 22 new lows.

US stocks close lower as first-quarter earnings concern deepen

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The stocks at the Wall Street declined on Monday amid rising fears of poor US first-quarter earnings due to the strong dollar and lower prices of crude oil.

Nine out of the 10 S&P 500 sectors dropped, led by a 1.1 percent drop in S&P industrials. General Electric shares declined 3.1 percent to USD 27.63 after rallying on Friday, when the company said that it has the potential to return over USD 90 billion to the investors by 2018. 3M Co shares fell 0.7 percent at USD 165.84.

The greenback was last up 0.1 percent compared to a basket of major currencies after hitting a 99.99 peak. This was the highest level recorded in four weeks period. A stronger dollar tends to hurt the profits for the American multinationals. The crude oil in the United States edged higher but significant losses since last year have weighed on the results of the energy companies.

John Carey, portfolio manager at Boston-based Pioneer Investment Management, said, “We’re all waiting on earnings, which are going to be coming fast and furious as we move through the week. I think there is some trepidation about what the earnings announcements are going to look like and so investors are cautious.”

According to Carey, most people are hoping for weak earnings due to the strong greenback, reduced crude oil prices and sluggish consumer spending in the country due to the harsh winters.

The S&P 500 fell 0.46 percent, or 9.63 points, to 2,092.43, the Dow Jones industrial average dropped 0.45 percent, or 80.61 points, to 17,977.04. The Nasdaq Composite tumbled 0.15 percent, or 7.73 points, to 4,988.25.

The Nasdaq traded briefly above 5,000, coming within 110 points of its life-time intraday high.

The Nasdaq Composite posted 104 new highs and 24 new lows, while the S&P 500 recorded 24 new 52-week highs and no new lows.

Nearly 5.4 billion shares changed hands at the American stock exchanges, below the daily average of 6 billion for the last five sessions, as per BATS Global Markets.

Strong US dollar set to adversely impact American multinationals earnings

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The strengthening of the US dollar is likely to pose serious threats to American corporate earnings since the global financial crisis of 2008, adversely affecting the results at the most US-based multinationals.

Some market analysts also believe that the rising value of greenback may lead to an earnings recession.

The US dollar, which has gained 22 percent in the last 12 months against a basket of major currencies, has landed a double whammy on American firms with big sales abroad.

Analysts say the earnings and revenue from foreign markets are worth less when they are actually translated into US dollars, making their costs relatively less competitive against rivals producing in those nations whose currencies are weakening.

Strategists at Bank of America/Merrill Lynch term the condition created by the moves of greenbacks with such a magnitude in the past few months as an “earnings recession”.

In general terms, ‘earnings recession’ is defined as at least two successive quarters of drop in the earnings from the quarters of years earlier.

According to the brokerage, a 25 percent surge in the greenbacks in a 12-month period has historically coincided with a drop of 10 percent in the earnings of market per share.

The earnings per share of S&P 500 are expected to decline 3.1 percent during the first quarter and 0.7 percent during the second quarter before modestly recovering in the second-half of 2015.

As per the reports, about one-fifth of firms featuring at the S&P 500 have cautioned on earnings for the first quarter, with nearly 49 companies mentioning the adverse effects of the US dollar on results.

Richard Bernstein, a senior Wall Street strategist and chief executive of New York-based Richard Bernstein Advisors, said, “This is just the beginning…This impact of the dollar on US earnings could last for three to seven years. It may not happen every quarter but there’s a secular risk to U.S. earnings, primarily to multinationals, as the dollar appreciates.”

The analysts’ expectations for earnings of S&P 500 are likely to keep declining as firms tally the impact of US dollar on results in the upcoming weeks.

The US dollar, which measures the greenbacks against basket of six major currencies, namely yen, euro, pound, Swedish krona, Swiss franc and Canadian dollar, has added about 3.5 percent since then.

On Wednesday, the Federal Reserve Bank lowered its expectations for the economic growth and inflation in the United States over the next two years. The step was widely seen as an acknowledgment by the US central bank that the rising dollar has stalled Fed’s plan to carry on with most awaited raising interest rates.

On the other front, the greenback’s gains are proving to be a boon for rivals in Europe and many other regions having more of their costs in currencies, like euro, that have dropped and will get the benefits of translation from dollar sales.

 

US stocks close on strong note; Nasdaq touches 15-year high

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US stock markets closed on a higher note on Friday as Nasdaq touched 15-year high, while the Dow Jones and the  S&P 500 made gains due to the strong US dollar that recovered after the monetary policy of Federal Reserve Bank led to instant fall during the week.

The new technology market barometer Nasdaq biotech index added 0.5 percent on Friday, marking gain of about 7.5 percent in the past eight sessions of trading.

Pharmaceutical firm Biogen Idec surged about 10 percent following announcement of promising results of its experimental drug for Alzheimer’s disease.

Nike surged 3.7 percent to USD 101.98 giving the major boost to the Dow Jones after it posted a quarterly profit beating the estimates of the market. The world’s largest sportswear making company sold shoes and apparels with more higher-margin, but cautioned that the strengthening dollar would take a toll on its current quarter.

The sharp gains in the greenback in the recent times have raised worries about the impact of the currency on the earnings of American multinationals.

The projections of earnings by S&P 500 for the first quarter as well as for 2015 have dropped significantly since January 1.

The Nasdaq Composite gained 34.04 points, or 0.68 percent, to a 15-year high at 5,026.42. The Dow Jones industrial average increased 168.62 points, or 0.94 percent, to 18,127.65, while the S&P 500 added 18.83 points, or 0.9 percent, to 2,108.10.

The US dollar was down 1.5 percent against a basket of major currencies.

Both the S&P 500 and the Dow gained 2.7 percent and 2.1 percent respectively during the week, snapping a run of losses for straight three-week. The S&P 500 ended less than 10 points down its record close.

On the other hand, the Nasdaq ended up 3.2 percent, only 22 points from its record closing high.

On the NYSE, the advancing issues outnumbered declining ones by 2,452 to 632. On the other hand, 1,661 issues increased and 1,116 dropped on the Nasdaq.

 

US stocks tumble ahead of Federal Reserve statement on rate hike

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The stocks at the Wall Street on Wednesday traded lower as the market and investors awaited with bated breath for signals on the preferred timing of a hike in the interest rates from the statement and press conference of Federal Reserve, which is expected in the afternoon.

The Dow Jones industrial average dropped slightly over 100 points during the morning trade, losing its gains for 2015. The index reported nine triple digits closes in the last two weeks, five downs and four ups.

The two-day meeting of Federal Open Market Committee, which will conclude on Wednesday, will be watched by the investors as they expect “patient” remains in the statement.

The highly anticipated statement is likely to come at 2 pm ET followed by a press conference of Federal Reserve Chairperson Janet Yellen at 2:30 pm.

Art Hogan, chief market strategist at Wunderlich Securities, said, “Everything all comes to a crescendo today at 2 o’clock. This is probably the most anticipated word change in the history of the Federal Reserve.”

“I truly believe the message is going to be that ‘patient’ isn’t in the statement so that gives us some option over the few months. We typically get a knee-jerk reaction. More times than not the first reaction is wrong,” Hogan said.

Many analysts said that changing the wording of Fed statement would not be fundamentally remarkable for the Wall Street.

The investors also closely watch if the stronger US dollar figures into the Federal Reserve statement. The greenback continued to remain at highs, while the euro dropped below USD 1.06.

Oil extended losses after the US Energy Information Administration report that the oil inventories increased 9.6 million barrels. On the other hand, crude oil traded just above USD 42 per barrel. Brent traded above USD 53 per barrel.

The US 10-year Treasury yield dropped to trade around 2.02 percent. The two-year note yield emerged 0.66 percent.

The shares lock-up of Alibaba expired on Wednesday, enabling the Chinese e-commerce and web giant to sell nearly 437 million of its shares.

Tech giant Apple Inc. is scheduled replacement of AT&T in the Dow Jones industrial average on Wednesday following the bell, as Visa implements a four-for-one stock split.

The European stocks turned mixed as the investors closely observed the outcome of the Federal Reserve meeting.

The S&P 500 traded 0.24 percent lower, or 5 points, at 2,069, with consumer staples leading seven sectors lower, while utilities leading advancers.

The Dow Jones Industrial Average traded down 75 points, or 0.42 percent, at 17,772. Coca-Cola was the leading decliners at the Dow Jones Industrial Average, while Caterpillar was the greatest advancer. On the other hand, the Nasdaq traded six points lower, or 0.14 percent, at 4,930.

Crude oil futures fell $1.21 to $42.25 a barrel on the New York Mercantile Exchange. Gold futures fell $1.30 to $,1,146 an ounce in mid-morning trade.

US stocks was mostly lower during the closed trade on Tuesday as the market keenly focused on the outcome of the Fed meeting over the rate hike. While the Dow Jones Industrial Average was off triple digits, the Nasdaq emerged in the black.

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