Stock Market News for January 23, 2015 – Zacks Investment Research
Benchmarks turned positive for the year on Thursday after ECB announced a large-scale bond buying program to revive the near-stagnant Eurozone economy. The European Central Bank (ECB) announced a quantitative easing program worth about 1.1 trillion euros to address the risks of deflation in Eurozone. Additionally, upbeat quarterly results by banks and transportation companies boosted investor sentiment. The S&P 500 touched its highest level since Dec 30 and closed above its 50-day moving average. While 9 out of 10 sectors of the S&P 500 ended in the green, 27 out of 30 components of the Dow settled in positive territory.
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The Dow Jones Industrial Average (DJI) gained 1.5% or 259.70 points to close at 17,813.98. The Standard & Poor 500 (S&P 500) also increased 1.5% to close at 2,063.15. The tech-laden Nasdaq Composite Index closed at 4,750.40; gaining 1.8%. The fear-gauge CBOE Volatility Index (VIX) plunged 13% to settle at 16.40, its lowest level this year. A total of 4.1 billion shares were traded on Thursday in NYSE. Advancers outpaced declining stocks on the NYSE. For 76% stocks that advanced, 21% declined.
Benchmarks rallied for the fourth-straight session after the ECB announced a larger than expected stimulus plan to boost Eurozone’s fragile economy. ECB President Mario Draghi said the bank will buy 60 billion euros a month in assets including both government and private sector bonds, and securities issued by European organizations. The bond-buying program will begin in March and is expected to continue at least till September 2016.
Draghi said the asset purchasing program could extend further provided ECB fails to meet its inflation target of just below 2%. Draghi told reporters in Frankfurt: “We see sustained adjustment in the path of inflation which is consistent with our aim of achieving our aim of inflation rates close to but below 2 percent.” Eurozone had moved closer to deflation after consumer prices dropped 0.2% annually in December.
ECB’s announcement of aggressive bound-buying program weighed on the euro. The euro weakened against the dollar. A stronger dollar in turn adversely affected dollar-denominated currencies including crude oil. Further, oil prices took a beating as inventory supply touched its highest level in eight decades. The West Texas Intermediate (WTI) crude oil price dropped 3.2% to settle at $46.31 per barrel. Additionally, price of Brent crude oil also fell almost 1.1% to settle at $48.52 per barrel. However, the Energy Select Sector SPDR (XLE) settled in positive territory; gaining 0.5%.
Coming to domestic events, transportation stocks soared on upbeat quarterly results. The Dow Jones Transportation Average gained 2.9%, the most since Oct 2014. Shares of Union Pacific Corporation (UNP – Analyst Report) advanced 4.8% after the company reported fourth-quarter 2014 adjusted earnings of $1.61 per share, beating the Zacks Consensus Estimate of $1.51.
Meanwhile, Southwest Airlines Co. (LUV – Analyst Report) reported fourth-quarter 2014 earnings of 59 cents a share, more than the Zacks Consensus Estimate of 54 cents. Alaska Air Group, Inc. (ALK – Snapshot Report) also posted fourth-quarter 2014 financial numbers with earnings per share of 94 cents beating the Zacks Consensus Estimate of 91 cents. Shares of Southwest Airlines and Alaska Air Group surged 8.4% and 4.6%, respectively.
KeyCorp. (KEY – Analyst Report) led gains among banks, banking on better-than-expected quarterly results. KeyCorp’s fourth-quarter 2014 earnings of 29 cents per share outpaced the Zacks Consensus Estimate of 26 cents. Shares of KeyCorp climbed 7.6%. Overall, the Financial Select Sector SPDR (XLF) gained 2.5%, the highest among the S&P 500 sectors. Leading companies from the sector such as Wells Fargo & Company (WFC – Analyst Report), JPMorgan Chase & Co. (JPM – Analyst Report), Berkshire Hathaway Inc. (BRK-B), Bank of America Corporation (BAC – Analyst Report) and Citigroup Inc. (C) increased 3.2%, 3%, 2%, 4.4% and 3.8%, respectively.
On the other hand, shares of Verizon Communications Inc. (VZ) dropped 0.9% after fourth quarter 2014 earnings of 71 cents per share came in line with the Zacks Consensus Estimate. Shares of American Express Company (AXP – Analyst Report) also declined 3.8% a day after the company said it will trim more than 4,000 jobs due to a possible rise in fourth-quarter expenses and provisions for loans. Both Verizon Communications and American Express weighed on the Dow.
eBay Inc. (EBAY – Analyst Report) also said it will cut 2,400 jobs from eBay Marketplaces, PayPal, and eBay Enterprise in 2015. However, shares of the company jumped 7.1% a day after its fourth-quarter 2014 earnings of 81 cents beat the Zacks Consensus Estimate of 77 cents.
The day’s economic data was limited to jobless claims numbers. The U.S. Department of Labor reported that initial claims for the week ending Jan 17 declined by 10,000 from the previous week’s level to 307,000. However, claims remained above the consensus estimate of 299,000.
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Stock Market News for January 23, 2015 – Zacks Investment Research
