Stock Market News for February 02, 2015 – February 2, 2015 – Zacks …
Benchmarks ended the last trading day of January in the red after lower-than-expected fourth quarter GDP data dented investor sentiment. However, a rally in oil prices helped the energy shares to end in the green. Benchmarks posted their fourth weekly decline in last five weeks. Benchmarks also registered losses for the second consecutive month. Separately, the S&P 500 and the Dow posted their biggest monthly loss in almost a year.
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The Dow Jones Industrial Average (DJI) declined almost 1.5%, or 251.90 points, to close at 17,164.95. The Standard & Poor 500 (S&P 500) lost 1.3% to close at 1,994.99. The tech-laden Nasdaq Composite Index closed at 4,635.24; declining 1%. The fear-gauge CBOE Volatility Index (VIX) jumped 11.8% to settle at 20.97. A total of about 8.5 billion shares were traded on Friday, above last five sessions’ average of 7 billion. Decliners outpaced advancing stocks on the NYSE. For 66% stocks that declined, 31% advanced.
The U.S. economy expanded at a lower-than-expected rate in the fourth quarter. According to the “advance” estimate by the Bureau of Economic Analysis, the fourth quarter output of goods and services increased at an annual rate of 2.6%, less than the consensus estimate of an increase by 3.6%. This rise in fourth quarter GDP was also less than the third quarter’s growth in real GDP by 5%.
Growth was hampered by decrease in business and government spending, and decline in demand for U.S. exports. However, real personal consumption expenditure, which accounts for almost two-third of the U.S. economy, accelerated 4.3% in the fourth quarter, its fastest pace since the first quarter of 2006.
Chicago PMI numbers turned out to be encouraging. The Supply Management-Chicago noted that Chicago Business Barometer went up to 59.4 in January from December’s reading of 58.3. This rise in the Chicago Purchasing Managers Index in January was in contrast to the Zacks Consensus Estimate of a decrease to 57.6. The increase in the Chicago PMI numbers was attributed to the increase in new orders and employment levels.
Separately, the University of Michigan and Thomson Reuters’ final reading of consumer sentiment was at 98.1 in January. This was less than the consensus forecast of an increase to 98.3.
Meanwhile, energy shares were able to move north banking on surge in oil prices. The prices of WTI crude oil and Brent crude oil increased 7.7% and 7.3% to $48.24 per barrel and $52.99 a barrel, respectively. Oil prices rallied following a big drop in U.S. rig counts as producers responded to abundant supply of oil.
The Energy Select Sector SPDR (XLE) gained 0.9%. The sector was the only gainer among the S&P 500 sectors. Shares of key energy stocks including Schlumberger Limited (SLB – Analyst Report), Kinder Morgan, Inc. (KMI – Analyst Report), Occidental and Petroleum Corporation (OXY – Analyst Report) increased 0.6%, 0.8% and 2.2%, respectively. However, shares of Chevron Corporation (CVX – Analyst Report) declined 0.5%, despite reporting fourth quarter earnings per share of $1.85, well above the Zacks Consensus Estimate of $1.67. However, Chevron’s profit of $2.57 per share dropped year on year due to continuous plunge in oil prices.
Shares of Xerox Corporation (XRX – Analyst Report) dropped 2.9% after the company reduced its 2015 outlook due to weak euro. Xerox expects to report earnings per share of $1 to $1.06 this year, less than the prior guidance of $1.11 to $1.17 a share. However, Xerox reported net income of 26 cents per share in the fourth quarter of 2014, more than 23 cents a share in the year-ago quarter.
Companies such as Amazon.com Inc. (AMZN – Analyst Report), Visa Inc. (V – Analyst Report), MasterCard Incorporated (MA – Analyst Report) and Biogen Idec Inc. (BIIB – Analyst Report) posted upbeat quarterly results. Amazon.com reported fourth quarter earnings per share of 45 cents that surpassed the Zacks Consensus Estimate of 24 cents. Visa’s first-quarter fiscal 2015 earnings per share of $2.53 beat the Zacks Consensus Estimate of $2.50. Visa’s rival, MasterCard reported fourth-quarter 2014 earnings per share of 72 cents that comfortably exceeded the Zacks Consensus Estimate of 67 cents. Biogen Idec reported fourth quarter 2014 earnings per share of $4.08, way above the Zacks Consensus Estimate of $3.74. Shares of Amazon.com, Visa, MasterCard and Biogen gained 13.7%, 2.8%, 0.8% and 10.2%, respectively.
Separately, shares of Google Inc. (GOOGL – Analyst Report) went up 4.7% despite its fourth quarter 2014 earnings per share of $5.50 missing the Zacks Consensus Estimate by 36 cents.
Meanwhile, discouraging news emanating from Greece also dampened investor sentiment. Greece’s finance minister Yanis Varoufakis rejected the country’s extended bailout program. Yanis Varoufakis also refused to co-operate with the European Union and the International Monetary Fund.
For the week, the S&P 500, Dow and Nasdaq declined 2.8%, 2.8% and 2.6%, respectively. Benchmarks ended in negative territory for the week due to decline in oil prices. Slump in oil prices offset the positive impact of Apple Inc.’s (AAPL – Analyst Report) record earnings results and the Federal Reserve’s encouraging view on economy and labor market.
Disappointing earnings results by Microsoft Corporation (MSFT – Analyst Report) and Caterpillar Inc. (CAT) also dragged down benchmarks. However, shares of major companies including Facebook, Inc. (FB), Ford Motor Co. (F) and DR Horton Inc. (DHI) gained following their solid earnings results.
For the month, the S&P 500, the Dow and the Nasdaq dropped 3.1%, 3.7% and 2.1%, respectively. In January, the World Bank reduced its global economic growth outlook for 2015 and 2016. Continuous plunge in oil prices also dampened investor confidence. Political uncertainty in Greece and Bill Gross’ dismal outlook for 2015 dented investor mood. Dismal retail sales report coupled with disappointing economic data including ISM Services Index and factory order added to the bearish sentiment.
JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C), Morgan Stanley (MS) and International Business Machines Corporation’s (IBM) disappointing fourth quarter earnings results too had a negative impact on investor sentiment.
Meanwhile, investors assessed the consequences that markets may face after Swiss National Bank dropped its long-standing exchange rate of the Swiss franc against euro.
Separately, the European Central Bank (ECB) announced a large-scale bond buying program to revive the near-stagnant Eurozone economy. The ECB announced a quantitative easing program worth about 1.1 trillion euros to address the risks of deflation in Eurozone.
Originally posted here –
Stock Market News for February 02, 2015 – February 2, 2015 – Zacks …
