Stock Market News for April 10, 2015 – Zacks Investment Research
Benchmarks posted modest gains on Thursday helped by gains in energy shares due to rise in oil prices. The day’s gains were limited as investors remained concerned about first quarter earnings results. A stronger U.S. dollar may negatively impact multinationals’ earnings results while overall weakness in oil prices will weigh on energy shares. Meanwhile, the first quarter earnings season kicked off with Alcoa and Bed Bath & Beyond reporting disappointing results.
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The Dow Jones Industrial Average (DJI) gained 0.3%, to close at 17,958.73. The Standard & Poor’s 500 (S&P 500) increased almost 0.5% to 2,091.18. The tech-laden Nasdaq Composite Index closed at 4,974.56; gaining 0.5%. The fear-gauge CBOE Volatility Index (VIX) dropped 6.4% to settle at 13.09. A total of about 3.1 billion shares were traded on NYSE on Thursday. Advancers equaled declining stocks on the NYSE. For 48% stocks that advanced, the same percentage declined.
Benchmarks ended Thursday’s volatile trading session in the green after a rebound in oil prices boosted energy shares. Oil prices moved north on Thursday, banking on strong German economic data and uncertainty over Iranian nuclear deal. German industrial orders, a key measure of demand for goods in the country, increased 0.2% in February compared to a month earlier. German adjusted trade surplus remained more or less steady at 19.6 billion euros in February, with both exports and imports rising 1.5% and 1.8%, respectively, from a month earlier.
Iran said it will sign the final nuclear agreement provided all the sanctions imposed on them are lifted on the same day. The prices of WTI crude oil and Brent crude oil increased 0.7% and 1.8% to $50.79 per barrel and $56.57 a barrel, respectively. Oil prices bounced back after tumbling more than 6% on Wednesday on news that U.S. crude inventories touched its largest weekly build in 14 years.
The Energy Select Sector SPDR (XLE) gained 1.6%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation (XOM – Analyst Report) and Chevron Corporation (CVX – Analyst Report) advanced 0.7% and 0.3%, respectively. Other key energy stocks such as Schlumberger Limited (SLB – Analyst Report), EOG Resources, Inc. (EOG – Analyst Report) and Transocean Ltd. (RIG – Analyst Report) increased 2.7%, 1.8% and 3.8%, respectively.
The Health Care Select Sector SPDR (XLV) advanced almost 0.8% and was the second biggest gainer among the S&P 500 companies. Key holdings including Johnson & Johnson (JNJ – Analyst Report), Pfizer Inc. (PFE – Analyst Report), Merck & Co. Inc. (MRK – Analyst Report), Gilead Sciences Inc. (GILD – Analyst Report) and Amgen Inc. (AMGN – Analyst Report) increased 1.2%, 1.1%, 0.5%, 1.3% and 0.7%, respectively. Overall, 8 out of 10 sectors of the S&P 500 ended in the green.
Meanwhile, investors remained worried about first quarter earnings results as a stronger dollar and drop in oil prices are likely to have a negative impact on earnings. Some of the day’s major earnings results were discouraging. Bed Bath & Beyond Inc. (BBBY – Analyst Report) reported fourth quarter earnings per share of $1.80 that fell short of the Zacks Consensus Estimate by a penny. Revenues of $3,336.6 million for the quarter were also less than the Zacks Consensus Estimate of $3,366 million. Fluctuations in foreign exchange rate and prolonged West Coast port slowdown had a negative impact on the company’s results.
Alcoa Inc. (AA – Analyst Report) also posted revenues of $5,819 million in the first quarter that missed the Zacks Consensus Estimate of $5,852 million. However, earnings per share came in at 28 cents, more than the Zacks Consensus Estimate of 26 cents.
Shares of Bed Bath & Beyond and Alcoa dropped 5.4% and 3.4%, respectively. While, Bed Bath & Beyond turned out to be the biggest loser among the companies listed in the S&P 500, Alcoa was the second biggest decliner in the index.
Investors also continued to debate the timing of interest rate hike. On Wednesday, Fed minutes hinted at a possible rate hike this year. While “several” officials favored a rate hike in June, others opined a rate hike isn’t necessary until later this year as strong dollar and drop in oil prices will keep inflation rate lower.
Coming to economic reports, the U.S Department of Labor reported that seasonally adjusted initial claims increased 14,000 to 281,000 in the week ending Apr 4. The rise was less than the consensus estimate of initial claims increasing to 290,000.
Separately, the U.S. Department of Commerce announced that US wholesale inventories rose 0.3% in February after increasing 0.4% in January. This rise in wholesale inventories in February was more than the consensus estimate of a rise of 0.2%.
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Stock Market News for April 10, 2015 – Zacks Investment Research
