US stocks ended higher on Tuesday as investors weighed earnings reports, while oil advanced. The dollar weakened, with disappointing housing market reports reinforcing expectations of a slower pace of interest rate hikes. According to live dollar index data, the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.6% to 93.9480.
The Dow Jones Industrial Average gained 0.27%, settling at 18053.60. The S&P 500 closed 0.3% higher at 2100.80, with eight of ten main sectors ending in positive territory, led by a 2.13% gain in materials sector. The Nasdaq Composite dropped 0.4% as sentiment for tech stocks was hurt by a 5.59% drop in IBM (NYSE:IBM) shares, after the blue chip major reported its worst quarterly revenue in 14 years. Netflix (NASDAQ:NFLX) shares sank 12.97% after posting weak earnings and lower than expected subscriber forecast. Goldman Sachs (NYSE:GS) shares gained 2.28% on better-than-expected quarterly earnings. Johnson & Johnson (NYSE:JNJ) added 1.57% after it reported marginal growth in quarterly revenues.
Investors are cautious, as earnings of S&P 500 companies are estimated to fall 7.6% on average together with a 1.3% decline in revenues. Currently the S&P 500 is trading at about 17.8 times expected earnings, the highest level since 2004.
In economic data, building permits sank to a 12-month low in March while housing starts slumped nearly 9%. Today at 13:00 CET Mortgage Applications will be released in the US. At 16:00 CET March Existing Home Sales will be released. The tentative outlook is positive.
European stocks rose on Tuesday as market sentiment was buoyed by positive corporate reports and gains in commodity companies. The euro edged higher against the dollar. The Stoxx Europe 600 jumped 1.5%, ending at a three-month high. Energy stocks advanced as oil prices rose: Tullow Oil (LON:TLW) rallied 5% and Statoil (NYSE:STO) gained 3.5%. Germany’s DAX 30 index jumped 2.3% to 10349.59 after the ZEW report showed investor sentiment in the country improved in April: the ZEW expectations index rose to 11.2 points from 4.3 points in March. France’s CAC 40 index added 1.3%.
European Central Bank’s survey showed banks have increased loans to firms and household consumer loans in the first quarter, using additional funds from the central bank's large-scale asset purchase program. Investors are waiting for the ECB policy meeting tomorrow. It is widely expected the ECB will not make additional rate cuts after lowering the deposit rate to negative 0.4% from negative 0.3% in March, and ECB chief Mario Draghi suggested there would be no further cuts. Today at 10:30 CET February labor market data will be released in the UK. The unemployment rate is expected to remain unchanged at 5.1% while average weekly earnings over a three month period ending in December are expected to remain flat at 2.1%.
Chinese stocks are retreating today with the Shanghai Composite Index down 3.6% and more than 1,000 stocks trading in negative territory. Nikkei ended up 0.2% as yen strengthened against the dollar after trading lower earlier in the session. Bank of Japan Governor Kuroda said that nationwide supply chains have begun to feel the negative impact of recent strong earthquakes.
Crude oil prices are falling today after Kuwaiti oil workers ended a three-day strike. May West Texas Intermediate crude rose 3.3% to $41.08 a barrel on the New York Mercantile Exchange on Tuesday, as Kuwaiti oil workers were on strike to protest proposals to cut wages and benefits for all public-sector employees. Today at 16:30 CET US Crude Oil Inventories will be released by Energy Information Administration. US crude stockpiles are expected to rise: according to American Petroleum Institute industry group data, US crude stocks rose 3.1 million barrels last week to 539.5 million.
Gold is steady today after June gold gained 1.7% to $1255.40 an ounce on Tuesday, as weaker dollar and disappointing housing market data provided a boost to the safe haven metal.