Stock Market News for February 03, 2014 – February 3, 2014 – Zacks …
Dismal earnings results and weak forecasts weighed heavily on the benchmarks once again, dragging them down on Friday. Markets finished in the red to post their worst monthly performance in over a year. It was also the benchmarks’ first monthly decline since last August. Energy and consumer discretionary sectors were among the biggest losers on Friday.
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The Dow Jones Industrial Average (DJI) slumped about 150 points, or 0.9%, to close at 15698.85. The Standard & Poor 500 (S&P 500) was down 0.7% to end Friday’s trading session at 1782.59. The tech-laden Nasdaq Composite Index dropped almost 0.5% to finish at 4103.88. The fear-gauge CBOE Volatility Index (VIX) increased 6.5% to settle at 18.41. Total volume on the New York Stock Exchange was 4.08 billion. Advancers were outpaced by the declining stocks on the NYSE; as for 36% stocks that gained, 60% ended in the red.
On Friday, market sentiment turned bearish following dismal results and forecasts, and another drop in Euro-zone inflation. Heavyweights including Amazon.com Inc. (NASDAQ:AMZN), Wal-Mart Stores Inc. (NYSE:WMT) and Chevron Corporation (NYSE:CVX) dealt crucial blows to the market following dismal earnings related news. Shares of these bellwethers were down 11.0%, 0.1% and 4.1%, respectively.
Amazon’s quarterly earnings and revenues were both below Street’s estimates and the company also issued a dismal sales forecast. The company reported earnings of 51 cents and revenues of $25.59 billion, missing estimates of 66 cents and $26.06 billion, respectively. In addition, the company’s quarterly sales forecast range of $18.2 billion to $19.9 billion also lagged Street’s expectation of $19.67 billion.
Tough winter season and lower food stamps led Walmart to trim its profit estimates. The retail behemoth said it now expects earnings to be at the lower end of its previous guidance of $1.60 to $1.70 per share.
Falling production and refinery margins dented Chevron’s fourth quarter performance. It reported earnings per share (excluding adjustments for foreign-currency effects) of $2.47, significantly below market expectations of $2.58. Earnings were also sharply down from the year-ago adjusted profit of $3.78 per share. Revenues came in at $56,158.0, far short of estimate of $76,427.0 million. Chevron’s revenues were also down 7.3% year on year.
Separately, a larger-than-expected drop in Euro-zone’s inflation rate also kept the mood bearish on the Street. Eurostat reported consumer prices to have increased 0.7% in January from year-ago period. This was short of economists’ expectations of a 0.9% gain.
Economists believe the lower-than-expected inflation rate will mount pressure on the European Central Bank. Some believe the bank may have to trim its refinancing rate to 0.10-0.15%. In addition, unemployment rate showed no movement from prior month and was stuck at 12% in January.
Coming back to domestic events, Chicago Purchasing Manager’s Index was down to 59.6 in January from 60.8 in December. This was the third-straight month of decline. The decline to 59.6 was however ahead of a consensus estimate of a drop to 59.3.
Separately, The Thomson Reuters/University of Michigan’s final reading of the consumer sentiment index was down to 81.2 in January from 82.5 in December. It also reported current economic conditions had dropped to 96.8 in January from December’s reading of 98.6. The Bureau of Economic Analysis reported a less than 0.1% increase in personal income, while disposable personal income dropped less than 0.1%.
On Friday, energy and consumer discretionary were the worst performing sectors. The Energy Select Sector SPDR (XLE) dropped 1.3% and stocks such as Exxon Mobil Corporation (NYSE:XOM), Schlumberger Limited (NYSE:SLB), Occidental Petroleum Corporation (NYSE:OXY) and Halliburton Company (NYSE:HAL) dropped 2.0%, 1.4%, 0.8% and 0.9%, respectively.
The Consumer Discretionary Select Sector SPDR (XLY) was down 1.4% too and stocks from these sector like The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), priceline.com Incorporated (NASDAQ:PCLN) and Starbucks Corporation (NASDAQ:SBUX) declined 0.8%, 0.1%, 1.3% and 1.1%, respectively.
These factors dragged benchmarks lower on Friday, leading benchmarks to suffer heavy losses for January. Through January, emerging market concerns, China’s dismal economic data and finally the Federal Reserve’s $10 billion cut to the economic stimulus dealt severe blows to the markets. For January, the blue-chip index plunged 5.3%, S&P 500 was down 3.6% and Nasdaq ended the month with 1.7% decline. This was the blue-chip index’ worst start since 2009.
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Stock Market News for February 03, 2014 – February 3, 2014 – Zacks …
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