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Stock Market News For Apr 12, 2019

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U.S. stocks were mostly lower on Thursday as investors cautiously waited for first quarter earnings to gather steam from Friday. Positive developments on trade war front did little to lift investors’ sentiment. The Dow and Nasdaq Composite ended in the negative territory while the S&P 500 managed to advance. However, price movements were marginal in either direction.

The Dow Jones Industrial Average (DJI) closed at 26,143.05, declining 0.1%. The S&P 500 Index (INX) gained 0.11 points to close at 2,888.32. However, the Nasdaq Composite Index (IXIC) closed at 7,947.36, shedding 0.2%. A total of 6 billion shares were traded on Thursday, lower than the last 20-session average of 7.17 billion shares. This marks the lowest trading volume since Dec 24. Advancers outnumbered decliners on the NYSE by 2.10-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.21-to-1 ratio.  The CBOE VIX decreased 2.1% to close at 13.02. 

How Did the Benchmarks Perform?

The Dow ended in negative territory previous day’s gains with 15 stocks of the 30-stockblue-chip index finishing in the green while fourteen ended in the red. The tech-heavy Nasdaq Composite also finished in the red due to weak performance by large-cap tech stocks.

The S&P 500 closed in the green for second successive days. The Industrials Select Sector SPDR (XLI) gained 0.9% while Health Care Select Sector SPDR (XLV) dropped 1.2%.  Notably, seven out of eleven sectors of the benchmark index closed in the green while four finished in the red.

First-Quarter Earnings Expectations

Expectations for first-quarter 2019 earnings are far from encouraging at present. Total earnings of the S&P 500 Index are anticipated to be down 4% from the same period last year. Broad-based margin pressure across all major sectors is the primary reason for an expected earnings decline. However, revenues for the S&P 500 companies are expected to increase 4.6% year over year. (Read More: Previewing Bank Earnings)

Major banks that are scheduled to release earnings results before the opening bell on Friday Include JPMorgan Chase & Co. (JPM - Free Report) and Wells Fargo & Co. (WFC - Free Report) . Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Trade Conflict Inches Toward Solution

Per The Wall Street Journal, China has agreed to open its cloud-computing space to foreign companies, especially to U.S. companies in an effort to clinch a trade deal with the United Sates. The offer can be regarded as a sweetener since the U.S. government has already rejected China’s previous offers characterizing them as inadequate.

On Apr 10, U.S. Treasury Secretary Steven Mnuchin said the U.S. and China are making progress on a trade deal, including resolving a key sticking point, full protection for U.S. intellectual property. Both countries have decided to establish enforcement offices to deal with the negotiation process.  

Economic Data

The Department of Labor reported that initial applications for unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended Apr 6, lower than the consensus estimate of 212,000. This marks the lowest level of initial claims since October 1969. Notably, previous weeks initial claims were revised upward to 204,000 from 202,000. The Number of people receiving benefits after an initial week of aid – popularly known as continuing claims - decreased 13,000 to 1.71 million.

The Department of Labor reported that producer price index (PPI) for the month of March increase 0.6%, higher than the consensus estimate of 0.3%. This marks highest increase since October 2018. PPI increased 0.1% in February.

The PPI increased 2.2% year over yearin March. However, core PPI (excluding food, energy and trade services) increased 2% year over year in March, signifying  the smallest annual increase since August 2017.

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