U.S. stock markets ended in the red on Thursday with all three major indexes declined broadly. Thursday’s earnings results failed to live up to investor’s expectations despite remain strong. Moreover, a spike in the yield of 10-year Treasury Note also panicked investors. However, the markets shed some of its losses in the final hour of trading following as the news surfaced that President Trump is not the subject of Special Counsel Robert Mueller's investigation.
The Dow Jones Industrial Average (DJI) closed at 24,664.89, declining 0.3%. The S&P 500 Index (INX) decreased 0.6% to close at 2,693.13. The Nasdaq Composite Index (IXIC) closed at 7,238.06, decreasing 0.8%. A total of 6.52 billion shares were traded on Thursday, lower than the last 20-session average of 6.98 billion shares. Decliners outnumbered advancers on the NYSE by 2.22 -to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.71 to -1 ratio. The CBOE VIX increased 2.3% and closed at 15.96.
How Did the Benchmarks Perform?
The Dow decreased 0.3% with 8 stocks of the 30-stock index closing in the green while 22 stocks traded in the red. Thursday’s decline pushed back the blue-chip index into the negative territory for the year.
The S&P 500 decreased 0.6% led by 2.9% decline of the Consumer Staple Select Sector SPDR (XLP) and a 1.7% decrease of Real Estate Select Sector SPDR (XLRE) partially offset by a 1.5% gain of the Financials Select Sector SPDR (XLF). Nine out of 11 sectors of the benchmark index ended in negative territory with four of them losing more than 1%. The index recorded 22 new 52-week highs and 16 new 52-week lows.
The tech-laden Nasdaq Composite also lost 0.8%. Weak financial outlook given by Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) had a domino effect on the entire technology sector, especially on the semiconductor stocks. The index recorded 87 new 52-week highs and 52 new 52-week lows.
Taiwan Semiconductor Pulls Down Technology Stocks
Taiwan Semiconductor, the largest contract chipmaker worldwide, stated that its second-quarter 2018 revenues will likely fall in the range of $7.8 billion to $7.9 billion, lagging the consensus estimate of $8.5 billion. Consequently, the stock price declined 5.6%.
The company reported mixed results in the first quarter of 2018. While the top line outpaced the Zacks Consensus Estimate, the bottom line lagged the same (Read More).
Taiwan Semiconductor’s poor guidance pulled down other major tech stocks like Apple Inc. (AAPL - Free Report) , Micron Technology Inc. (MU - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) by 2.8%, 4.8%, 3.1% and 2.4%, respectively. Notably, Taiwan Semiconductor is the largest chipset supplier to both Apple and NVIDIA.
Consumer Staples Sector Broadly Lower
Consumer Staples stocks also face the brunt of the investors as earnings did not produce any blowout results which the market was looking for.
Share price of tobacco giant Philip Morris International Inc. (PM - Free Report) plunged 15.8% after its first quarter earnings best Zacks Consensus Estimate but revenues lagged the same as growth in its heated tobacco devices slowed and cigarette demand continued to decline. Thursday’s stock fall was the biggest in company’s history since 2008 (Read More).
Consumer-goods behemoth The Procter & Gamble Co. (PG - Free Report) reported strong results in the third quarter of fiscal 2018 wherein both the top and the bottom line outpaced the respective Zacks Consensus Estimate (Read More).
However, the share price of Procter & Gamble declined 4.2% after the company agreed to acquire Germany’s Merck KGaA’s consumer health business for a consideration of $4.2 billion.
Rising Bond Yield Panic the Market
Investors remain concerned as the 10-year Treasury Note yield reached above 2.9%. The benchmark 10-year Treasury note increased 4.6 basis points to 2.914% on Apr 19, its highest level since February 23, as per Tradeweb data. The 30-year bond yield also advanced 5.8 basis points to 3.106%, its highest level since March 21.
This augmented investor’s fear that inflationary pressure will be more than market expectation which will force the Fed to raise interest rate. Last time the benchmark yield crossed 2.9% mark was in February resulting in market corrections.
President Trump Exempts of Mueller’s Investigation
During the final hour of trading session, Bloomberg News reported that Deputy Attorney General Rod Rosenstein told President Donald Trump last week he is not the target of an investigation by special counsel Robert Mueller. Mueller is investigating into whether Trump’s campaign team colluded with Russia in the run-up to the 2016 presidential election. The report helped Wall Street recover some of its losses.
Stock That Made Headline
GATX Q1 Earnings Surpass Estimates, Revenues Disappoint
GATX Corp. (GATX - Free Report) posted mixed results in first-quarter 2018, wherein earnings per share outpaced the Zacks Consensus Estimate but revenues lagged the same (Read More).
Skechers USA’s Q1 Earnings Meet, Muted Outlook Hurts Stock
Skechers USA Inc.’s (SKX - Free Report) first-quarter 2018 earnings came in line with The Zacks Consensus Estimate. The company delivered net sales surpassed the Zacks Consensus Estimate (Read More).
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