U.S. stocks closed lower as the holiday-shortened week continued to supply pressure amid persistent geopolitical concerns. Financials were among the worst performers on the heels of a slide in Treasury yields and ahead of tomorrow's unofficial kick off to 1Q earnings season. Crude Oil prices trimmed some recent gains despite a bullish oil inventory report. Gold ticked higher and the U.S. dollar dropped sharply after President Trump commented that he thought the currency was getting "too strong." In equity news, Delta Air Lines topped the Street's profit forecasts, while BlackBerry received a boost after the conclusion of an arbitration proceeding with Qualcomm (NASDAQ:QCOM).
The Dow Jones Industrial Average (DJIA) declined 59 points (0.3%) to 20,592, the S&P 500 Index lost 9 points (0.4%) to 2,345, and the NASDAQ Composite declined 31 points (0.5%) to 5,836. In moderate volume, 761 million shares were traded on the NYSE and 1.6 billion shares changed hands on the NASDAQ. WTI crude oil shed $0.29 to $53.11 per barrel and wholesale gasoline was $0.02 lower at $1.74 per gallon. Elsewhere, the Bloomberg gold spot price was $6.90 higher at $1,281.76 per ounce, and the dollar index, a comparison of the U.S. dollar to six major world currencies, was 0.5% lower at 100.16.
Delta Air Lines Inc. (NYSE:DAL $45) reported 1Q earnings-per-share (EPS) of $0.82, or $0.77 ex-items, compared to the $0.75 FactSet estimate, as revenues declined 1.1% year-over-year (y/y) to $9.2 billion, roughly in line with forecasts. The company noted that it expects the entirety of its 2017 margin pressure to have occurred in 1Q from higher fuel prices. DAL added that it is on track to expand margins for the balance of the year, due to an improving revenue profile and further improvement as its cost growth moderates in the second half. Shares finished higher.
BlackBerry Ltd (NASDAQ:BBRY $9) jumped after receiving a binding interim arbitration award requiring Qualcomm Inc. (QCOM $53) to refund a sum of $814.9 million, plus interest and attorney's fees to the company, related to royalties for certain past sales of subscriber units. QCOM said it does not agree with the decision, which is binding and not appealable. The arbitration decision was limited to prepayment provisions unique to BlackBerry's license agreement with Qualcomm and has no impact on agreements with any other licensee. QCOM traded lower.
Tractor Supply Co. (NASDAQ:TSCO $65) preannounced that it anticipates 1Q EPS to be below the Street's expectations, and its same-store sales to unexpectedly decline. The company cited decreases in comparable transaction count and average ticket, along with lower sales of seasonal merchandise and the impact of deflation. Shares fell.
Neurocrine Biosciences Inc (NASDAQ:NBIX $52) surged after announcing that it got approval from the U.S. Food and Drug Administration (FDA) of its treatment for movement disorder.
Import prices dip, mortgage applications rise
The Import Price Index declined 0.2% month-over-month (m/m) for March, matching the Bloomberg projection and compared to February's upwardly revised 0.4% gain. Compared to last year, prices were higher by 4.2%, above forecasts calling for a 4.0% rise, and following February's upwardly revised 4.8% increase.
The MBA Mortgage Application Index rose 1.5% last week, following the previous week's 1.6% decline. The increase came as a flat reading for the Refinance Index was met with a 2.9% gain for the Purchase Index. The average 30-year mortgage rate declined 6 basis points (bps) to 4.28%.
Bond yields have fallen as of late, amid the backdrop of heightened geopolitical uncertainty and concerns about "hard data" lagging "soft data," while the markets grapple with Fed rate hikes and the potential for sooner-than-expected normalization of its balance sheet.
The U.S. economic calendar for tomorrow will commence with the Producer Price Index (PPI), with economists expecting no change month-over-month (m/m) for March, while excluding food and energy, the core rate is anticipated to have moved 0.2% higher, and weekly initial jobless claims, forecasted to have increased by 9,000 to a level of 245,000.
The docket will round out the day with the release of the preliminary University of Michigan Consumer Confidence Index, anticipated to have ticked lower to 96.5 in April, after rising to 96.9 for March's final read.
Europe and Asia mixed on earnings and geopolitics
European equities finished mixed, with auto stocks getting modest support from upbeat results from Mercedes-Benz maker Daimler AG (DE:DAIGn $74), while tensions toward North Korea and last week's U.S. missile strike in Syria kept geopolitical concerns elevated and 1Q U.S. earnings season looms. Political uncertainty in the region remained as Brexit negotiations continue and a key French Presidential election draws near.
Stocks in Asia finished mixed with risk aversion boosting the yen as geopolitical tensions ramp up toward North Korea and in the wake of last week's missile strikes by the U.S. in Syria. The yen's rally weighed on Japanese stocks, with additional pressure likely extended by a softer-than-expected read on the nation's machine orders, a gauge of capital spending, for February.
Indian equities continued to pullback from a recent record run amid the geopolitical uneasiness and ahead of reports after the closing bell that showed industrial production surprisingly fell and consumer price inflation was slightly cooler than expected.
Mainland Chinese shares declined after data showing consumer price inflation rose at a smaller pace than anticipated and producer price inflation decelerated by a smaller rate than projected. Stocks trading in Hong Kong staged a late-day rally to finish higher, South Korean listings rose and Australian securities ticked higher.
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