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Stocks May Move Back To The Downside In Early Trading - U.S. Commentary

After posting strong gains in the two previous sessions, stocks are likely to give back some ground in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 71 points.

The downward momentum for the markets is partly due to disappointing economic news out of China, the world's second largest economy behind the U.S.

Data released by the Chinese National Bureau of Statistics showed that Chinese economic growth slowed to 8.1 percent in the first quarter from 8.6 percent in the fourth quarter. Economists had expected a more modest slowdown to 8.4 percent.

Traders have also shown a negative reaction to quarterly results from JP Morgan (JPM) and Wells Fargo (WFC), which are moving lower in pre-market trading despite reporting better than expected first quarter earnings.

JP Morgan reported first quarter earnings of $1.31 per share, well above analyst estimates for $1.18 per share. While the company also reported a 6 percent increase in total revenues, investment banking revenue fell by 11 percent.

Meanwhile, Wells Fargo reported first quarter earnings of $0.75 per share on revenues of $21.6 billion compared to analyst estimates for earnings of $0.73 per share on revenues of $20.4 billion.

Following the release of the results, shares of JP Morgan are down by 0.8 percent in pre-market trading, while shares of Wells Fargo are down by 1.6 percent.

On the other hand, shares of Google (GOOG) are moving higher in pre-market trading after the web search giant reported better than expected first quarter earnings.

Google also announced plans to create a new class of non-voting shares, which will be distributed through a stock dividend to all existing shareholders.

In U.S. economic news, the Labor Department recently released a report showing an increase in consumer prices in the month of March that matched economic estimates.

The report showed that the consumer price index rose by 0.3 percent in March following a 0.4 percent increase in February.

The core consumer price index, which excludes food and energy prices, edged up by 0.2 percent in March, also matching the expectations of economists.

Not long after the open, Reuters and the University of Michigan are due to release a report on consumer sentiment in the month of April. The consumer sentiment index is expected to be unchanged from the previous month at 76.2.

After moving notably higher on Wednesday, stocks saw further upside during trading on Thursday. With the strong upward move, the markets continued to recover from the sell-off seen earlier in the week.

The major averages closed firmly in positive territory, near their best levels of the day. The Dow jumped 181.19 points or 1.4 percent to 12,986.58, the Nasdaq surged up 39.09 points or 1.3 percent to 3,055.05 and the S&P 500 soared 18.86 points or 1.4 percent to 1,387.57.

In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Friday, adding to yesterday's gains. Japan's Nikkei 225 Index advanced by 1.2 percent, while Hong Kong's Hang Seng Index jumped by 1.8 percent.

Meanwhile, the major European markets have come under pressure on the day. While the U.K.'s FTSE 100 Index is down by 0.7 percent, the German DAX Index and the French CAC 40 Index are down by 1.1 percent and 1.3 percent, respectively.

In commodities trading, crude oil futures are sliding $0.49 to $103.15 a barrel after rising $0.94 to $103.64 a barrel on Thursday. Gold futures are down $11.60 at $1,669 an ounce. In the previous session, the precious metal rose $20.30 to $1,680.60 an ounce.

Among currencies, the U.S. dollar is trading at 81.04 yen compared to the 80.89 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3126 compared to yesterday's $1.3188.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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