Market Analysis

Beyond the Numbers

Upbeat JPMorgan Earnings May Generate Early Buying Interest
4/12/2019 8:58 AM

The major U.S. index futures are currently pointing to a notably higher opening on Friday after stocks ended the previous session little changed.

Early buying interest is likely to be generated in reaction to upbeat earnings news from JPMorgan Chase (JPM), with the financial giant moving significantly higher in pre-market trading.

The advance comes after JPMorgan kicked off the earnings season by reporting record first quarter earnings and revenues that exceeded analyst estimates.

The better than expected results from JPMorgan may offset some of the recent concerns about corporate results for the quarter.

Trading activity may remain somewhat subdued, however, as a slew of big-name companies are scheduled to release their results next week.

Stocks fluctuated over the course of the trading session on Thursday before eventually ending the day little changed. The major averages spent a big chunk of the day bouncing back and forth across the unchanged line.

While the S&P 500 inched up 0.11 points or less than a tenth of a percent to 2,888.32, the Dow edged down 14.11 points or 0.1 percent to 26,143.05 and the Nasdaq dipped 16.88 points or 0.2 percent to 7,947.36.

Traders seemed reluctant to make more significant moves amid uncertainty about the upcoming earnings season, as some analysts expect the results to be disappointing.

Financial giants JPMorgan Chase (JPM) and Wells Fargo (WFC) are due to report their quarterly results before the start of trading on Friday, marking the unofficial start of the reporting season.

Lingering uncertainty about the global economic outlook and a potential U.S.-China trade deal also kept traders on the sidelines.

Traders largely shrugged off a report from the Labor Department showing first-time claims for U.S. unemployment benefits once again slid to their lowest level in nearly 50 years in the week ended April 6th

The report said initial jobless claims fell to 196,000, a decrease of 8,000 from the previous week's revised level of 204,000.

The continued drop surprised economists, who had expected jobless claims to rise to 211,000 from the 202,000 originally reported for the previous week.

With the unexpected decrease, initial jobless claims fell to their lowest level since hitting 193,000 in October of 1969.

Meanwhile, a separate Labor Department report showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.6 percent in March after inching up by 0.1 percent in February. Economists had expected prices to rise by 0.3 percent.

Core producer prices, which exclude food and energy prices, also rose by 0.3 percent in March following a 0.1 percent uptick in February. Core prices had been expected to edge up by 0.2 percent.

Compared to the same month a year ago, producer prices were up by 2.2 percent in March, reflecting an acceleration from the 1.9 percent increase in February.

The annual rate of growth in core consumer prices edged down to 2.4 percent in March from 2.5 percent in the previous month.

"The upshot is that the producer price data are consistent with consumer price inflation remaining slightly below the Fed's target," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

Biotechnology stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Biotechnology Index down by 2.4 percent.

Significant weakness also emerged among steel stocks, as reflected by the 1.7 percent slump by the NYSE Arca Steel Index.

Gold stocks also came under pressure as the day progressed, resulting in a 1.5 percent drop by the NYSE Arca Gold Bugs Index. The weakness among gold stocks comes amid a steep drop by the price of the precious metal.

Healthcare stocks also showed a notable move to the downside on the day, while some strength was visible among housing and transportation stocks.

Commodity, Currency Markets

Crude oil futures are jumping $0.88 to $64.46 a barrel after tumbling $1.03 to $63.58 on Thursday. Meanwhile, after plunging $20.60 to $1,293.30 an ounce in the previous session, gold futures are inching up $1.40 to $1,294.70 an ounce.

On the currency front, the U.S. dollar is trading at 111.98 yen compared to the 111.66 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1318 compared to yesterday’s $1.1253.


Asian stocks ended mostly higher on Friday as positive U.S. data and optimism over a potential U.S.-China trade deal helped offset growth worries to some extent.

Chinese trade data proved to be a mixed bag, with exports rebounding to a five-month high, while imports fell more than expected.

China's Shanghai Composite Index finished marginally lower at 3,188.63, but Hong Kong's Hang Seng index edged up 0.2 percent to 29,909.76.

Official data showed that Chinese exports surged up 14.2 percent in March from a year earlier, beating analysts' expectations and marking the strongest growth in five months.

Imports dropped an annual 7.6 percent, worse than analysts' forecasts for a 1.3 percent drop and widening from February's 5.2 percent slump.

Japanese shares a hit four-month high as investors braced for earnings and an upcoming 10-day holiday in the country.

The Nikkei 225 Index closed up 159.18 points or 0.7 percent at 21,870.56, its highest level since December 5. The broader Topix ended marginally lower at 1,605.40.

Heavyweight Fast Retailing jumped 7.9 percent. SoftBank Group advanced 4.9 percent after Uber Technologies filed for its initial public offering in the U.S. SoftBank is Uber's biggest investor.

Panasonic added 2.8 percent. The Nikkei business review reported that Panasonic and electric car company Tesla have frozen a plan to boost capacity of the Gigafactory 1 battery plant in Nevada due to weak demand for the vehicles.

Toshiba Corp lost 2.7 percent after the Japanese conglomerate said that China's ENN Ecological Holdings Co. has scrapped an agreement to take over Toshiba's U.S. liquefied natural gas business.

Australian markets finished notably higher as higher iron ore prices lifted mining stocks. The benchmark S&P/ASX 200 Index climbed 52.60 points or 0.9 percent to 6,251.30 and the broader All Ordinaries Index ended up 52.90 points or 0.8 percent at 6,347.

Miners BHP, Rio Tinto and Fortescue Metals Group ended narrowly mixed, while the big four banks jumped 1-2 percent.

Gold miner Evolution tumbled 3 percent after gold prices fell more than 1 percent on robust economic data from the United States. Energy stocks ended broadly higher despite a sharp drop in crude oil prices overnight.

Seoul stocks closed higher as Chinese exports data topped forecasts. The benchmark Kospi rose 9.01 points or 0.4 percent to 2,233.45 despite a summit between Seoul and Washington failing to reach an agreement on economic sanctions on Pyongyang.

Market heavyweight Samsung Electronics rallied 1.3 percent on expectations that falling memory chip prices will bottom out soon. Korean Air jumped 7.6 percent on restructuring news. Asiana Airlines shares soared 29.3 percent.


European stocks have advanced on Friday as investors digest trade data from China and earnings news from JP Morgan Chase and Wells Fargo.

In economic news, a Eurostat report showed that Eurozone industrial output fell by less than expected in February.

While the German DAX Index has climbed by 0.7 percent, the French CAC 40 Index is up by 0.4 percent and the U.K.’s FTSE 100 Index is up by 0.2 percent.

Covestro has rallied after the Bayer spinoff said it is on a long-term and profitable growth track and remains well positioned and highly profitable.

Spanish bank Banco Santander has also moved higher after announcing an offer to buy all shares of Santander Mexico it doesn't own.

UniCredit, Italy's biggest bank, has also moved to the upside despite saying it is one of the banks accused of running a cartel in trading eurozone government bonds between 2007 and 2012.

On the other hand, shares of online trading platform Plus500 have slumped after the company reported a big drop in quarterly revenue.

U.S. Economic Reports

Reflecting another spike in prices for fuel imports, the Labor Department released a report showing U.S. import prices increased by more than expected in the month of March.

The Labor Department said import prices climbed by 0.6 percent in March after jumping by an upwardly revised 1.0 percent in February.

Economists had expected prices to rise by 0.4 percent compared to the 0.6 percent increase originally reported for the previous month.

The report said export prices also increased by 0.7 percent in March, matching the upwardly revised advance in February.

Export prices had been expected to edge up by 0.2 percent compared to the 0.6 percent increase originally reported for the previous month.

At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of April. The consumer sentiment index is expected to edge down to 98.0 in April after climbing to 98.4 in March.

Stocks In Focus

Shares of Anadarko Petroleum (APC) are soaring in pre-market trading after the oil and gas exploration and production company agreed to be acquired by energy giant Chevron (CVX) in a stock and cash transaction valued at $33 billion, or $65 per share.

Other oil and gas exploration companies like Apache (APA), Devon Energy (DVN) and Pioneer Natural Resources (PXD) are also seeing pre-market strength on news of the deal.

On the other hand, shares of Mosaic (MOS) are likely to see initial weakness after the phosphate and potash miner announced plans to idle production at its Tapira and Catalão phosphate mines in Brazil.
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