Stock Market News for January 29, 2015 – Zacks Investment Research

Benchmarks eroded initial gains to end in the red as another decline in oil prices offset the positive impact of Apple’s record earnings results and the Fed’s encouraging view on economy and labor market. After concluding its two-day meeting on Wednesday, the Federal Open Market Committee (FOMC) provided a positive picture regarding economic growth and labor market, and also maintained it would remain “patient” before hiking interest rate.

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The Dow Jones Industrial Average (DJI) declined 1.1%, or 195.84 points, to close at 17,191.37. The Standard & Poor 500 (S&P 500) lost 1.4% to close at 2,002.16. The tech-laden Nasdaq Composite Index closed at 4,637.99; declining 0.9%. The fear-gauge CBOE Volatility Index (VIX) jumped 18.7% to settle at 20.44. A total of about 4.1 billion shares were traded on NYSE on Wednesday. Decliners outpaced advancing stocks on the NYSE. For 72% stocks that declined, 26% advanced.

On Wednesday, shares of Apple Inc. (AAPL – Analyst Report) jumped 5.7% after posting record earnings of roughly $18 billion in fiscal first-quarter 2015. The tech giant reported quarterly earnings of $3.06, rising 47.8% year over year and comfortably beating the Zacks Consensus Estimate of $2.60. Revenues increased 30% year over year to $74.6 billion, comparing favorably with the Zacks Consensus Estimate of $66.9 billion. Strong demand for Apple products across all geographical regions primarily drove the earnings. Improved performance was driven by record sales of the iPhone, which hit 74.5 million units, increasing 46% year over year. iPhone revenues surged 57% from the year-ago quarter to $51.2 billion.

Moreover, The Boeing Company’s (BA – Analyst Report) shares gained 5.4% after reporting 22.9% year-on-year jump in adjusted fourth-quarter 2014 earnings to $2.31 per share, beating the Zacks Consensus Estimate of $2.07. The company’s revenues rose approximately 3% year over year to $24.5 billion in the reported quarter, beating the Zacks Consensus Estimate of $23.8 billion.

Meanwhile, the Federal Reserve offered a dovish picture of economic growth and labor market after the two-day FOMC meeting concluded on Wednesday. The Fed said: “Economic activity has been expanding at a solid pace… Labor market conditions have improved further, with strong job gains and a lower unemployment rate.” The Fed upgraded its view on economy by saying the economy is growing at “a solid pace”, compared to its earlier view of “a moderate pace.”

Moreover, the Fed also restated the phrase “patient” regarding interest rate hike. The Fed stated: “The committee judges that it can be patient in beginning to normalize the stance of monetary policy.” The Fed said that they will consider “financial and international developments” before raising key interest rates. It also said that an inflation rate impacted by falling oil prices is also a matter of concern before rate hike. It indicated that rate hike may not come sooner than mid 2015.

However, another slump in oil prices eroded all of the initial gains and dragged down benchmarks into negative territory on Wednesday. The U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories rose 8.9 million barrels in the week ending Jan 23 to 406.7 million barrels. This was the highest level of inventories recorded in at least 80 years. Following the report, the prices of WTI crude oil and Brent crude oil plunged 4% and 2.3% to $44.45 per barrel and $48.47 a barrel, respectively.

Decline in oil prices had a negative impact on the Energy Select Sector SPDR (XLE). The sector declined more than 3.9% and was the biggest loser among the S&P 500 sectors. Key energy stocks including Chevron Corporation (CVX – Analyst Report), Exxon Mobil Corporation (XOM – Analyst Report), Schlumberger Limited (SLB – Analyst Report) and Halliburton Company (HAL – Analyst Report) lost 4.2%, 3.3%, 4.5% and 4.9%, respectively. All the 10 S&P 500 sectors registered losses on Wednesday.

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Stock Market News for January 29, 2015 – Zacks Investment Research