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Stock Market News for April 21, 2014

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Benchmarks finished hardly changed on Thursday as investors received mixed corporate results as well as encouraging economic data. Morgan Stanley, General Electric, Goldman Sachs and Pepsi reported upbeat quarterly results.  However, the Dow closed in negative territory following IBM and UnitedHealth Group’s dismal earnings report.  Google’s disappointing earnings also weighed on the markets.  Positive economic data on unemployment-insurance benefits and a gauge of manufacturing sentiment in the Philadelphia region were some of the bright spots of the day.

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) dropped 0.1% to close Thursday’s trading session at 16,408.54. The Standard & Poor 500 (S&P 500) rose 0.1% to finish at 1,864.85. The tech-laden Nasdaq Composite Index went up 0.2% to 4,095.52. The fear-gauge CBOE Volatility Index (VIX) plunged 5.8% to settle at 13.36. Total volume for the day was roughly 6.10 billion shares, lower than this month’s average of 6.88 billion. Declining stocks were outnumbered by advancing stocks on the NYSE. For 41% stocks that declined, 56% advanced.
The day’s upbeat quarterly results had a positive impact on the broader markets. Morgan Stanley’s (NYSE:MS) earnings per share from continuing operations of 68 cents outpaced the Zacks Consensus Estimate and prior-year quarter figure of 60 cents
Also, The Goldman Sachs Group, Inc.’s (NYSE:GS) first-quarter 2014 earnings per share came in at $4.02, beating the Zacks Consensus Estimate of $3.43.
Diversified conglomerate General Electric Company (NYSE:GE) and food/beverage giant Pepsico, Inc.’s (NYSE:PEP) better-than-expected corporate results also added to the bullish mood. General Electric posted first quarter 2014 operating earnings of 33 cents a share, beating the Zacks Consensus Estimate by a penny.
Pepsico topped the Zacks Consensus Estimate on both top and bottom lines. Pepsi’s first-quarter 2014 core earnings per share of 81 cents beat the Zacks Consensus Estimate by about 8.0%. Revenues beat the Zacks Consensus Estimate of $12.47 billion by 1.2%.
Shares of Morgan Stanley, Goldman Sachs, General Electric and Pepsico increased 2.9%, 0.1%, 1.7% and 0.9%, respectively.
However, the blue-chip index ended lower, dragged down by International Business Machines Corporation (NYSE:IBM) and UnitedHealth Group’s (NYSE:UNH) dismal corporate results. IBM reported disappointing revenues in the first quarter of 2014, which missed the Zacks Consensus Estimate for the fifth straight quarter. IBM’s first-quarter revenues of $22.48 billion declined 3.9% from the year-ago quarter and 18.8% on a sequential basis. However, earnings of $2.54 per share were in line with the Zacks Consensus Estimate.
UnitedHealth Group reported first-quarter 2014 operating earnings of $1.10 per share, a penny ahead of the Zacks Consensus Estimate. However, the U.S. health insurer’s earnings decreased from $1.16 per share earned in the year-ago quarter. Shares of IBM and UnitedHealth Group dropped 3.3% and 3.1%, respectively.
Also, Google Inc.’s (NASDAQ:GOOG) earnings of $5.33 per share (including traffic acquisition costs) missed estimates by 17.6%. Shares of the tech-giant lost 3.7%.
Investors welcomed data on manufacturing sentiment in the Philadelphia region and initial claims. The Philadelphia Federal Reserve’s manufacturing index surged to 16.6 in April from 9.0 in March. The surge was more than the consensus expectation of an increase to 9.5. It also stated that demand for manufactured goods as measured by new orders index increased to 14.8.
Separately, the U.S Department of Labor reported that seasonally adjusted initial claims increased 2,000 to 304,000 in the week ending April 12. However, this rise in application for unemployment benefits was less than the consensus expectations of initial claims increasing to 318,000.
Both the Dow and the Nasdaq gained 2.4% during the holiday-shortened week. The S&P 500 gained 2.7%, its best weekly gain since July 2013.
Benchmarks advanced for the week primarily boosted by upbeat quarterly results and encouraging economic data. Citigroup Inc. (NYSE:C), The Coca-Cola Company NYSE:KO) and Johnson & Johnson’s (NYSE:JNJ) better-than-expected quarterly earnings had a positive impact on the benchmarks. Yahoo! Inc.’s (NASDAQ:YHOO) higher revenues also contributed to the bullish mood. The week’s encouraging retail sales data and industrial production data were cheered by the investors. Federal Reserve Chairwoman Janet Yellen’s speech in New York and better-than-expected Chinese economic data were the other factors that boosted investor sentiment.
Six out of 10 sectors of the S&P 500 ended in the green. The Energy Select Sector SPDR (XLE) led the advance as the sector rose 0.9%. Key stocks from the sector such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Occidental Petroleum Corporation (NYSE:OXY), EOG Resources, Inc. (NYSE:EOG) and ConocoPhillips (NYSE:COP) increased 0.5%, 1.5%, 0.8%, 1.4% and 1.3%, respectively.

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