After trading in a narrow range throughout the day, U.S. equities again finished mixed and near the unchanged mark, as investors search for any sort of spark amid the smothering uneasiness of lingering political uncertainty on both sides of the Atlantic and mixed earnings reports. Treasuries moved higher amid the indecision, and despite two bearish oil inventory reports crude oil got a slight reprieve from yesterday's drop, while gold also gained ground and the U.S. dollar was flat.
The Dow Jones Industrial Average (DJIA) lost 36 points (0.2%) to 20,054, the S&P 500 Index gained nearly 2 points (0.1%) to 2,295, and the Nasdaq Composite added 8 points (0.2%) to 5,682. In moderate volume, 854 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil inched $0.17 higher to $52.34 per barrel and wholesale gasoline rose $0.06 to $1.55 per gallon. Elsewhere, the Bloomberg gold spot price increased $6.43 to $1,240.28 per ounce, and the dollar index, a comparison of the U.S. dollar to six major world currencies, was unchanged at 100.27.
Dow member Walt Disney Co. (NYSE:DIS $109) reported fiscal 1Q earnings-per-share (EPS) ex-items of $1.55, above the $1.49 FactSet estimate, as revenues declined 3.0% year-over-year (y/y) to $14.8 billion, versus the expected $15.3 billion. Reduced costs helped bottomline results, but revenues were hampered by continued struggles with its cable unit, with lower ad revenue and higher programing costs out of ESPN remaining a drag. Shares traded higher despite the softer-than-expected revenue.
Time Warner Inc. (NYSE:TWX $97) posted 4Q EPS ex-items of $1.25, topping the forecasted $1.19, with revenues increasing 11.0% y/y to $7.9 billion, above the projected $7.7 billion. Shares finished modestly higher.
Gilead Sciences Inc. (NASDAQ:GILD $66) reported 4Q earnings ex-items of $2.70 per share, above the expected $2.61, as revenues fell 13.9% y/y to $7.3 billion, compared to the expected $7.1 billion. However, shares of GILD fell sharply as the company warned that its revenues for its hepatitis-C drugs, a major driver of its sales, could be well below what the Street had expected. Separately, the company increased its quarterly dividend by 10% to $0.52 per share.
Akamai Technologies Inc. (NASDAQ:AKAM $64) reported 4Q EPS ex-items of $0.72, exceeding the expected $0.68, with revenues rising 6.0% y/y to $616 million, compared to the projected $605 million. The web content delivery company's 1Q outlook roughly matched forecasts but it warned of further margin pressure in 2017 amid ramped up product/marketing investments. Shares were sharply lower.
Mortgage applications rise
The MBA Mortgage Application Index rose 2.3% last week, following the previous week's 3.2% decline. The increase came as a 2.2% gain for the Refinance Index was met with a 1.8% rise for the Purchase Index. The average 30-year mortgage rate fell 4 basis points (bps) to 4.35%.
Treasuries were higher, as the yield on the 2-year note dipped 2 bps to 1.14%, while the yield on the 10-year note fell 5 bps to 2.34%, and the 30-year bond rate dropped 7 bps to and 2.95%.
Bond yields have slipped as of late amid festering political uncertainty and as the Fed's monetary policy statement appeared to keep expectations of accelerated rate hikes in 2017 in check. The U.S. dollar was nearly unchanged following yesterday's rebound off of a more than two-month low, while the recent record highs for the major U.S. stock markets, aided by continued upbeat economic data, have tempered.
Tomorrow's economic calendar will offer investors a look at weekly initial jobless claims, forecasted to increase to a level of 249,000 from the prior week's 246,000, as well as wholesale inventories, with economists expecting a 1.0% month-over-month (m/m) increase in December, matching that registered in November.
Europe and Asia mixed amid political uneasiness
European equities showed some late-session resiliency as Italian markets reversed sharply to the upside late in the session, but finished mixed, with the markets digesting a plethora of diverging earnings results, while political uncertainty in the U.S. and Europe remained. Financials and basic materials issues led to the downside, though utilities jumped, with bond yields seeing some pressure on the festering global market political uneasiness. Oil and gas issues failed to overcome early weakness even as crude oil prices reversed to the upside despite some bearish reports on U.S. oil inventories.
French business sentiment in January unexpectedly declined, while Spain's industrial output fell in December. The euro and British pound ticked higher versus the U.S. dollar.
Stocks in Asia finished mixed after overcoming some early pressure amid the backdrop of heightened political uncertainty in the U.S. and Europe, though the energy sector remained in the red after a drop in crude oil prices yesterday and some bearish oil inventory data in the U.S. Japanese equities rose, with the yen choppy as the markets digested bond buying operations by the Bank of Japan. Stocks in China and Hong Kong advanced, despite lingering liquidity concerns as the People's Bank of China held off on open market operations for a fourth day. Meanwhile, Australian securities increased, with financials and consumer goods stocks gaining solid ground, to more than offset a drop in oil and gas issues.
However, markets in South Korea declined, as did those in India after the Reserve Bank of India (RBI) decided to hold its monetary policy stance unchanged versus expectations of a rate cut. The RBI added that it decided to change its stance from accommodative to neutral after forecasting a noticeable recovery in economic growth.
Tomorrow, reports scheduled for release overseas include: new home sales and business confidence from Australia, machine tool orders from Japan, and Germany's trade balance.