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Beyond the Numbers

Earnings News Remains In Focus On Wall Street
4/19/2018 8:54 AM

The major U.S. index futures are pointing to a lower opening on Thursday following the lackluster performance seen in the previous session.

The downward momentum on Wall Street comes as traders digest the latest batch of earnings news from several big-name companies.

After moving notably higher over the two previous sessions, stocks turned in a lackluster performance during trading on Wednesday. The major averages fluctuated as the day progressed before ending the session mixed.

The Dow dipped 38.56 points or 0.2 percent to 24.748.07, while the Nasdaq rose 14.14 points or 0.2 percent to 7,295.24 and the S&P 500 inched up 2.25 points or 0.1 percent to 2,708.64.

The choppy trading seen on Wall Street came amid a mixed reaction to quarterly results from several big-name companies.

While United Continental (UAL) and CSX Corp. (CSX) moved notably higher after reporting better than expected earnings, IBM Corp. (IBM) came under pressure after providing disappointing full-year earnings guidance.

Traders also seemed somewhat reluctant to continue buying stocks amid uncertainty about the near-term outlook for the markets.

Toward the end of the trading day, the Federal Reserve released its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The Beige Book said economic activity continued to expand at a modest to moderate pace across the twelve districts in March and early April.

The Fed also said the economic outlooks remains positive but noted contacts in various sectors, including manufacturing, agriculture, and transportation, have expressed concern about newly imposed or proposed tariffs.

With regard to inflation, the Beige Book said prices increased across all twelve districts, generally at a moderate pace.

Steel stocks moved sharply higher on the day, driving the NYSE Arca Steel Index up by 3.3 percent. With the jump, the index reached its best closing level in over a month.

Among steel stocks, Steel Dynamics (STLD) posted a notable gain ahead of the release of its first quarter results after the close of today's trading.

Significant strength was also visible among energy stocks, which moved higher along with the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 2.9 percent, the NYSE Arca Natural Gas Index surged up by 2.3 percent and the NYSE Arca Oil Index climbed by 1.7 percent.

Transportation and gold stocks also saw notable strength on the day, while tobacco and semiconductor stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.81 to $69.28 a barrel after spiking $1.95 to $68.47 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,351.30, down $2.20 compared to the previous session’s close of $1,353.50. On Wednesday, gold rose $4.

On the currency front, the U.S. dollar is trading at 107.34 yen compared to the 107.23 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2381 compared to yesterday’s $1.2374.

Asia

Asian stocks rose across the board on Thursday as trade tensions faded and commodities rallied on optimism about global economic growth.

While the dollar continued to trade in a narrow range against the yen, oil prices held near 3-1/2 year highs after reports that top oil exporter Saudi Arabia would be happy to see crude prices surge up to $100 a barrel over the coming months.

China's Shanghai Composite Index advanced 26.15 points or 0.9 percent at 3,117.55, led by gains by material and energy stocks. Hong Kong's Hang Seng Index surged up 424.19 points or 1.4 percent to 30,708.44.

Japanese shares hit a seven-week high after Prime Minister Shinzo Abe and U.S. President Donald Trump said they had agreed to intensify consultations for expanding investment and trade between the two longtime allies.

The Nikkei 225 Index edged up 32.98 points or 0.2 percent to 22,191.18, while the broader Topix Index closed marginally higher at 1,750.18.

Komatsu, Hitachi Construction Machinery, Nippon Steel, Kobe Steel, JFE Holdings, Mitsubishi Materials, Toha Zinc, Mitsui Mining and Smelting and Sumitomo Metal Mining soared 3-8 percent. Automaker Subaru Corp declined 2.3 percent after allegations of mileage cheating.

Australian shares extended gains for the fifth straight session as surging metal and oil prices helped lift mining and energy stocks.

Investors shrugged off a jobs report showing that the Australian economy added 4.900 jobs last month, well shy of estimates for an increase of 20,000 jobs following the increase of 17,500 jobs in the previous month.

Separate survey data from National Australia Bank showed that Australia's business sentiment index remained unchanged at +7 in the first quarter.

The benchmark S&P/ASX 200 Index rose 19.60 points or 0.3 percent to 5,881.00, while the broader All Ordinaries Index closed up 20.10 points or 0.3 percent at 5,976.40.

BHP Billiton, Rio Tinto, Fortescue Metals Group, South32 and Alumina jumped 3-7 percent after industrial commodity prices rallied overnight on fears of tightening supplies.

Gold miner Evolution Mining gained 0.9 percent after reporting an increase in gold production in the March quarter.

Woodside Petroleum and Oil Search rose about 1 percent after crude oil prices jumped almost 3 percent overnight on fears of supply disruptions and a drawdown in U.S. crude stockpiles.

Meanwhile, wealth manager AMP extended losses to end down 2.9 percent at a more than four-year low.

Europe

European stocks are turning in a mixed performance on Thursday as investors digest a slew of earnings reports and looked ahead to the spring meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG).

While the German DAX Index has fallen by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.1 percent.

Warning of rising threats to the world financial system, the IMF said markets are exposed to a sharp tightening in financial conditions, which could lead to a sudden unwinding of risk premiums and a repricing of risky assets.

In economic news, the euro area current account surplus declined in February, the European Central Bank said. The current account surplus fell to a seasonally adjusted 35.1 billion euros in February from 39 billion euros in January.

The pound slipped for a third day after official data showed that U.K. retail sales including auto fuel dropped 1.2 percent month-on-month in March, in contrast to a 0.8 percent increase in February. Sales were forecast to fall 0.6 percent.

Swiss engineering firm ABB has jumped after its first quarter earnings topped forecasts. Nutrition, health and wellness giant Nestle has also risen after confirming its 2018 guidance.

Engineering firm Weir Group has surged higher after the company unveiled plans to acquire U.S. competitor Esco Corp. and reported first quarter revenues in line with expectations.

French advertising group Publicis has soared nearly 8 percent after its first quarter revenue growth topped forecasts.

Meanwhile, drug giant Novartis has dropped after reporting a sharp slump in sales by its U.S. generics unit.

Unilever has also moved lower on news its first quarter revenue fell over 5 percent due to adverse currency movements.

Department store group Debenhams has come under pressure after the company lowered its full-year profit expectations.

Germany's MorphoSys has also declined after announcing the pricing of its American Depository shares.

U.S. Economic Reports

The Labor Department released a report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended April 14th.

The report said initial jobless claims edged down to 232,000, a decrease of 1,000 from the previous week’s unrevised level of 233,000. Economists had expected jobless claims to dip to 230,000.

A separate report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly saw a modestly faster rate of growth in the month of April.

The Philly Fed said its diffusion index for current general activity inched up to 23.2 in April from 22.3 in March, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to dip to 20.1.

At 9:30 am ET, Federal Reserve Vice Chairman for Supervision Randal Quarles is due to provide semi-annual testimony before the Senate Banking Committee.

The Conference Board is scheduled to release its report on leading economic indicators in the month of March at 10 am ET. The leading economic index is expected to rise by 0.3 percent in March after climbing by 0.6 percent in February.

At 11 am ET, the Treasury Department is scheduled to announce the details of next week’s auctions of two-year, five-year, and seven-year notes.

Cleveland Fed President Loretta Mester is due to speak about the economic outlook and monetary policy at an event hosted by the University of Pittsburgh Joseph M. Katz Graduate School of Business and Deloitte in Pittsburgh at 6:45 pm ET.

Stocks In Focus

Shares of Sleep Number (SNBR) are moving sharply lower in pre-market trading after the mattress retailer reported first quarter results that came in below analyst estimates.

Home furnishings retailer Pier 1 Imports (PIR) is also likely to open considerably lower after reporting better than expected adjusted fiscal fourth quarter earnings but weaker than expected sales.

Shares of Procter & Gamble (PG) are also seeing pre-market weakness even though the consumer products giant reported better than expected fiscal third quarter results. P&G also announced it is buying the consumer health business of Germany’s Merck for about $4.2 billion.

Chipmaker Taiwan Semiconductor Manufacturing (TSM) may also come under pressure after forecasting weaker than expected second quarter revenues.

On the other hand, shares of American Express (AXP) are moving significantly higher in pre-market trading after the credit card giant reported first quarter results that beat analyst estimates on both the top and bottom lines.

Aluminum producer Alcoa (AA) may also see early strength after reporting better than expected first quarter earnings and raising its full-year guidance

Shares of Blackstone (BX) are also likely to move to the upside after the private equity firm reported first quarter results that exceeded expectations, added $1 billion to its stock buyback program and declared a special dividend.
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