Stock Market News for April 30, 2015 – Zacks Investment Research

Stock Market News for April 30, 2015 – Zacks Investment Research

Benchmarks finished in negative territory on Wednesday on weak GDP report while Fed retained the data-dependent stance regarding rate hike. The U.S. economy expanded at a slower pace in the first quarter due to severe winter weather, major disputes in ports and stronger dollar that adversely affected export-oriented companies. Meanwhile, investors continued to keep an eye on first quarter earnings results.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) declined 0.4% to close at 18,035.53. The Standard & Poor’s 500 (S&P 500) also decreased 0.4% to 2,106.85. The tech-laden Nasdaq Composite Index closed at 5,023.64; declining 0.6%. The fear-gauge CBOE Volatility Index (VIX) climbed 7.9% to settle at 13.39. A total of about 7.2 billion shares were traded on Wednesday, more than the month to date average of 6.3 billion. Decliners outpaced advancing stocks on the NYSE. For 64% stocks that declined, 33% advanced.

According to the “advance” estimate by the Bureau of Economic Analysis, the first quarter output of goods and services increased at an annual rate of 0.2%. This was less than the consensus estimate of an increase by 1%. This rise in first quarter GDP was also less than the fourth quarter’s growth in real GDP by 2.2%.

Growth was hampered by harsh winter weather, cheaper oil prices, stronger dollar and disruptions in Western Coast ports. Meanwhile, real personal consumption expenditure, which accounts for almost two-third of the U.S. economy, increased 1.9% in the first quarter. This however was significantly less than the 4.4% increase in the fourth quarter. However, federal government spending expanded at 0.3%, which compared favorably to a 7.3% fall in the fourth quarter.

The Federal Open Market Committee’s two-day policy meeting concluded yesterday. The Fed stated: “Economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady.” Fed officials looked beyond the negative impact of winter, noting “households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high”.

However, Fed officials remained uncertain as to when the economic growth will gain momentum due to lack of firm evidence. They gave no clear guidance on the timing of interest rate hike, which eventually did little to boost investor sentiment.

Meanwhile, the only bright spot yesterday was pending home sales data. The National Association of Realtors reported that Pending Home Sales Index, a forward looking indicator based on contract signings, went up 1.1% to 108.6 in March, the highest level since Jun 2013. However, the rise in pending home sales in March was less than the consensus expectation of a 1.2% increase.

On the earnings front, International Paper Company (IPAnalyst Report) reported first-quarter earnings per share of 84 cents, beating the Zacks Consensus Estimate of 77 cents. Eaton Corporation plc’s (ETNAnalyst Report) first quarter earnings per share of $1.01 were also able to beat the Zacks Consensus Estimate by 3.1%.

However, Wynn Resorts Ltd. (WYNNAnalyst Report) reported first quarter earnings per share of 70 cents that fell short of the Zacks Consensus Estimate of $1.36. Also, Humana Inc.’s (HUMAnalyst Report) first quarter earnings per share came in at $2.47, missing the Zacks Consensus Estimate of $2.54. Akamai Technologies, Inc. (AKAMAnalyst Report) too posted first quarter earnings per share of 50 cents that missed the Zacks Consensus Estimate by a penny.

Meanwhile, Hilton Worldwide Holdings Inc. (HLTSnapshot Report) posted first quarter earnings per share of 12 cents that came in line with the Zacks Consensus Estimate.

Shares of International Paper, Wynn Resorts, Humana and Akamai Technologies declined 0.7%, 16.6%, 7.2% and 1.2%, respectively. Eaton and Hilton’s shares gained 1.4% and 1.1%, respectively.

Including these reports, about 276 S&P 500 members have reported first quarter earnings results so far. Among the 276 members, first quarter earnings are up 9.1% on essentially flat revenues, with 65.8% beating earnings per share estimates and 41.7% coming ahead of top-line expectations.

Yesterday’s losses were broad based, with 9 out of 10 S&P 500 sectors ending in the red. The SPDR S&P Homebuilders ETF (XHB) dropped 1.2%, the highest among the S&P 500 sectors. Key holdings including KB Home (KBHAnalyst Report), Beazer Homes USA Inc. (BZHSnapshot Report), Ryland Group Inc. (RYLSnapshot Report), Toll Brothers Inc. (TOLAnalyst Report) and The Home Depot, Inc. (HDAnalyst Report) decreased 1.5%, 1.7%, 2.7%, 1.9% and 1.7%, respectively.

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Stock Market News for April 30, 2015 – Zacks Investment Research

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