Roundup: U.S. stocks post weekly mixed results amid corporate news, multiple data
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E-mail Xinhua, April 14, 2019
NEW YORK, April 13 (Xinhua) -- U.S. stocks wrapped up the week on a decent note, as investors digested a mixed batch of corporate news and economic data, amid concerns over global economic slowdown and a wait-and-see attitude towards the first-quarter corporate earnings season.
In the week ending April 12, the Dow slightly fell 0.03 percent, the S&P 500 was up 0.5038 percent, and the Nasdaq gained 0.57 percent.
This week marked choppy trading sessions for the market with a mixed start yet a high ending. On Friday, the three major indexes ended higher, closing out the week positively, as the market cheered a slew of ebullient corporate news, including JP Morgan Chase's robust earnings, Disney's new streaming service and a massive acquisition deal in the energy sector.
Friday notched solid gains throughout the day, as the Dow surged nearly 270 points, eroding most of the week's loss, and the prospering financials and industrials sectors boosted the S&P 500 to rally above the key 2,900 level for the first time in six months, while the tech-heavy Nasdaq extend gains of 0.46 percent.
The financial sector stood out among the 11 primary S&P sectors throughout Friday, extending the biggest gains in the tally, as JP Morgan Chase's stronger-than-expected earnings results kicked off the season with an encouraging start.
Shares of JP Morgan Chase rose nearly 4.7 percent around Friday's market close, as the U.S. banking heavyweight reported first-quarter earnings that topped analysts' expectations, driven by higher interest rates.
"Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong," CEO Jamie Dimon said in a statement.
Wells Fargo also posted better-than-expected earnings backed by its strong consumer lending business, yet its shares fell over 2.6 percent as pulled back by a grim outlook for its net interest income for 2019.
Earlier this week, analysts expected S&P 500 first-quarter profits to have dropped 2.5 percent from a year ago, their first contraction since 2016, according to Reuters, fanning worries over U.S. economic growth.
Yet veteran traders at the New York Stock Exchange (NYSE) voiced some rational thoughts on Wall Street's downbeat forecast, viewing it as an approach to dealing with uncertainties so as to shore up investor sentiment, as the market is always "forward-looking."
"In reaction to that (turbulent times), very often, analysts will lower their expectations as well. So what ends up happening in the end is very often corporations will what we call jump over the lower hurdle. So if you're a runner on a race and they lower the hurdles, it's easier to jump over them," Mark Otto, an experienced trader at U.S. market maker GTS, told Xinhua.
He noted that there's been much speculation on how the first quarter would affect the rest of the year, thus the market tends to be forward-looking.
"So if things aren't as bad as they had predicted, it could definitely be a positive for the outlook for the rest of the year. And again, if the market is forward looking, it can just react to this as somewhat what we call a speed bump," he added.
Echoing his analysis, Peter Tuchman, a seasoned trader at Quattro Securities, also noted that analysts normally lowered their estimates to avoid overreaction by the market.
"Sometimes those analysts tend to dampen expectations when things slow down, so that when the real news comes out, the reaction is not an overreaction," Tuchman told Xinhua in a recent interview.
"Economies go from being robust to being a little thinner. That's normal contraction. And there's consolidation ... I don't think that's a bad thing," he noted.
The three major indexes also got a lift on Wednesday by the latest meeting minutes of the Federal Open Market Committee, an executive arm of the U.S. central bank, which announced to keep its benchmark interest rates unchanged.
Yet the Fed has left some leeway for raising interest rates later this year, if economic conditions improve.
"Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year," said the minutes.
However, Tuesday was a day for Wall Street to mourn, with the three major indexes all sinking into the red territory, as the International Monetary Fund (IMF) trimmed its outlook for 2019 global economic growth to 3.3 percent.
That's down from its previous forecast of 3.5 percent, citing downside risks caused by global trade tensions and the U.S. Federal Reserve's monetary tightening, according to its April report on world economic outlook.
"The balance of risks remains skewed to the downside," the IMF said in the report. "Failure to resolve differences and a resulting increase in tariff barriers above and beyond what is incorporated into the forecast would lead to higher costs of imported intermediate and capital goods and higher final goods prices for consumers."
However, the expected retracement for growth was not a big thing to worry, as "we're still at positive growth," according to Matthew Cheslock, an experienced trader at Virtu Financial, a U.S. high-frequency trading and market making firm.
"The Fed and the ECB (European Central Bank) walk back some of their quantitative easing and things like that easy money policies, it's only natural to see a little bit of retracement in growth. So a 3.3 percent growth is still a phenomenal story worldwide," Cheslock told Xinhua in a recent interview.
"We've got to walk this fine line between corporate growth, strong growth globally and monetary policy out of some of the Fed and the ECB," he added.
Wall Street also digested a set of key economic data this week.
U.S. import prices rose 0.6 percent in March, and 1.7 percent in the first three months of 2019, the Labor Department said Friday. Both the March and February advances were driven by higher fuel prices.
The increase for the three months ended in March was the largest three-month rise since the period between October 2017 and January 2018.
U.S. jobless claims, or the number of people who applied for unemployment benefits, sharply declined by 8,000 to 196,000 in the week ending April 6, said the Labor Department on Thursday.
This marks the lowest level for initial claims since October 4, 1969, signaling a strong labor market that props up the U.S. economy.
The Producer Price Index for final demand rose 0.6 percent in March, the U.S. Bureau of Labor Statistics reported Thursday.
The increase came mainly as a surge in the cost of gasoline. For the 12 months ended in March, the final demand index increased 2.2 percent, the largest 12-month rise since December 2018.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in March on a seasonally adjusted basis after rising 0.2 percent in February, the U.S. Bureau of Labor Statistics reported Wednesday.
The growth was mainly lifted by the 3.5-percent increase in energy index last month, accounting for about 60 percent of the seasonally adjusted all items monthly increase.
Yet U.S. job openings declined to its lowest level in nearly a year, stoking worries over a slowdown in economic growth.
The number of job openings fell to 7.1 million on the last business day of February, the U.S. Bureau of Labor Statistics said Tuesday, with the largest decreases in accommodation and food services, real estate and rental and leasing, followed by transportation, warehousing, and utilities.
Factory orders in the U.S. also fell in February for the fourth time in five months, signaling an economic slowdown.
New orders for manufactured goods in February decreased 0.5 percent to 497.5 billion U.S. dollars, the U.S. Census Bureau reported Monday. This followed a virtually unchanged January decrease. Enditem
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