Stock Market News for May 04, 2015 – May 4, 2015 – Zacks.com
Markets made a strong comeback on Friday as investors added beaten down stocks to their portfolios. Moreover, General Motors and Ford posted better-than-expected U.S. auto sales numbers. Economic data was mixed. Each benchmarks gained at least 1%, limiting the weekly losses.
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) gained over 1% to close at 18,024.06. The Standard & Poor’s 500 (S&P 500) jumped about 1.1% to 2,108.29. The tech-laden Nasdaq Composite Index closed at 5,005.39; advancing 1.3%. The fear-gauge CBOE Volatility Index (VIX) plunged 12.7% to settle at 12.70. A total of 6.3 billion shares were traded on US exchanges on Friday. This was however lower than the last five trading days’ average. Advancers outpaced declining stocks on the NYSE. For 70% stocks that advanced, 29% declined.
On Friday, investors bought the stocks that were oversold during the week. Beaten-down stocks from the health and technology sectors found favor. Gains in these sectors also helped the Nasdaq end a four-day losing run. Meanwhile, the Nasdaq Biotechnology Index (NBI) reversed a five-day losing streak and gained 2.9%. However, its 5.5% loss for the week was the worst decline since Mar 2014.
Apple Inc. (AAPL – Analyst Report) boosted the tech sector and also the broader markets after gaining almost 3.1%. It was the biggest daily percentage gain since Jan this year. Apple too recovered from its previous day’s 2.7% decline. The Technology SPDR ETF (XLK) gained 1.3%. Other key tech gainers included International Business Machines Corporation (IBM), Cisco Systems, Inc. (CSCO), Oracle Corporation (ORCL), Intel Corporation (INTC), Texas Instruments Inc. (TXN) and Hewlett-Packard Company (HPQ). They advanced 1.4%, 1%, 1.7%, 2.7%, 2% and 2.5%, respectively.
Separately, shares of Gilead Sciences Inc. (GILD – Analyst Report) gained 4.5% on strong first quarter results. Earnings (including stock-based compensation expenses) of $2.89 per share surpassed expectations and were significantly higher than the year-ago figure of $1.44 per share. Revenues of $7.6 billion too beat expectations and improved from the year-ago figure of $5 billion. The positive result boosted both the Nasdaq and S&P 500. Shares of other major biotech stocks such as Biogen Inc. (BIIB), Amgen Inc. (AMGN), Celgene Corporation (CELG) and Regeneron Pharmaceuticals, Inc. (REGN) gained 3.3%, 1.6%, 2.3% and 3%, respectively.
Among other earnings results for the day, Expedia Inc. (EXPE – Analyst Report) gained almost 8% after reporting 19% gain in gross bookings and a 14% rise in revenues. However, Chevron Corporation (CVX – Analyst Report) posted a 43% drop in first quarter profits, hurt by low oil prices. Earnings per share came in at $1.37, which beat market expectations but deteriorated significantly from the year-ago profit of $2.36 per share. Revenues plummeted 35.1% year over year to $34,558 million. However, production and downstream results improved. Chevron’s shares dropped 1.8%.
LinkedIn Corporation (LNKD – Analyst Report) suffered an 18.6% decline on Friday after reporting dismal results late Thursday. The professional networking company reported wider-than-expected adjusted loss of 18 cents. Loss also widened from the year-ago loss of 8 cents. LinkedIn joined Twitter, Inc. (TWTR – Analyst Report) and Yelp Inc. (YELP – Snapshot Report) in the list of incurring sharpest weekly percentage decreases since their debuts.
As of Friday morning, 358 S&P 500 members have reported results. Total earnings for these 358 index members are up 5.8% on 3.2% lower revenues, with 66% beating EPS estimates and only 43.7% coming ahead of top-line expectations.
Investors also cheered positive US auto sales numbers. According to Autodata, April auto sales were at an annual rate of 16.45 million. Though this was short of expectations, auto sales improved from 16.05 million in the year-ago period. Sales for the largest US automaker General Motors Company (GM – Analyst Report) gained 6% and were better than expected.
Ford Motor Co. (F – Analyst Report), Fiat Chrysler Automobiles N.V. (FCAU – Snapshot Report) and Nissan Motor Co. Ltd. (NSANY – Snapshot Report) reported sales gains of 5.4%, 5.8% and 5.7%, respectively. Toyota Motor Corporation (TM – Analyst Report) reported 1.8% increase in sales, which however missed expectations. Shares of General Motors, Ford, Nissan and Toyota gained 1%, 0.01%, 0.2% and 0.7%, respectively. Fiat Chrysler shares were down 0.7%.
Coming to the economic data, financial data firm Markit confirmed weaker expansion in the U.S. manufacturing sector as output and new orders dropped. Final U.S. Manufacturing Purchasing Managers’ Index was down to 54.1 in April from 55.7 in March.
The Institute for Supply Management reported April PMI was flat month on month at 51.5 percent. The New Orders Index gained 1.7% to 53.5. Employment Index was at 48.3%, down by 1.7 percentage points.
Separately, the Department of Commerce reported lower-than-expected construction spending. March’s construction spending dropped 0.6% from February, in contrast to expectations of a 0.4% gain. Spending on private construction dropped 0.3% and public construction spending was down 1.5%.
However, April consumer sentiment rose to the second best level since 2007. The Thomson Reuters/University of Michigan’s final April consumer sentiment reading was 95.9, improving from March’s 93.
Friday’s robust gains could limit the weekly losses. For the week, the Dow, S&P 500 and the Nasdaq were down 0.3%, 0.4% and 1.7%, respectively. Benchmarks ended in the red on Monday, Wednesday and Thursday and were mixed on Tuesday. Each of the benchmarks had lost over 1% on Thursday, dragged by losses in technology and biotechnology stocks. Shares of Apple dropped 2.7% on Thursday after a key component of Apple Watch provided by AAC Technologies was found to be defective.
The major disappointment last week was the weaker-than-expected GDP data. According to the “advance” estimate, the first quarter GDP increased at an annual rate of 0.2%, 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%. U.S. first quarter GDP data came in weaker than expected due to harsh winter weather, cheaper oil prices, stronger dollar and disruptions in Western Coast ports.
On the other hand, Fed officials gave no clear guidance on the timing of interest rate hike, which did little to boost investor sentiment. They remain uncertain as to when the economic growth will gain momentum due to lack of firm evidence.
Among other data, investors received discouraging report on consumer confidence. However, personal income improved marginally in April, Chicago Business Barometer increased to 52.3 in April from March’s reading of 46.3, seasonally adjusted initial claims decreased 34,000 to 262,000 in the week ending Apr 25 and Pending Home Sales Index improved 1.1% to 108.6 in March.
Coming to the earnings numbers, encouraging numbers were reported by key companies such as Apple, United Parcel Service, Inc. (UPS), Merck & Co. Inc. (MRK), ExxonMobil Corporation (XOM). However, Restaurant Brands International Inc. (QSR), Twitter, Wynn Resorts Ltd. (WYNN), Akamai Technologies, Inc. (AKAM) were some of the popular names reporting dismal results.
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Stock Market News for May 04, 2015 – May 4, 2015 – Zacks.com
