Stocks May Show A Lack Of Direction After Yesterday's Sell-Off

Stocks May Show A Lack Of Direction After Yesterday's Sell-Off

The major U.S. index futures are pointing to a mixed opening on Wednesday following the sell-off seen in the previous session. While the Dow futures are up by 18 points, the Nasdaq futures dare own by 7.5 points.

The futures came under pressure early this morning as the yield on the benchmark ten-year note climbed more firmly above 3 percent.

The ten-year yield rose above 3 percent for first time since early 2014 in intraday trading on Tuesday before giving back ground.

Concerns rising inflation may lead the Federal Reserve to hike interest rates faster than previously expected have recently pushed yields higher.

Nonetheless, the futures significantly pared their losses following the release of quarterly results from aerospace giant Boeing (BA).

Boeing reported first quarter results that beat analyst estimates on both the top and bottom lines and raised its full-year guidance.

Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.

After failing to sustain an initial upward move, stocks moved sharply lower over the course of the trading session on Tuesday. With the pullback on the day, the Dow closed lower for the fifth consecutive session.

The major averages climbed off their worst levels in late-day trading but remained firmly negative. The Dow tumbled 424.56 points or 1.7 percent to 24,024.13, the Nasdaq plunged 121.25 points or 1.7 percent to 7,007.35 and the S&P 500 slumped 35.73 points or 1.3 percent to 2,634.56.

The sell-off on Wall Street came as traders shrugged off an initial positive reaction to earnings news from several big-name companies.

Shares of Caterpillar (CAT) showed a notable downturn after the heavy equipment maker reported better than expected first quarter results but executives said the quarter would be the “high watermark for the year.”

Conglomerate 3M Corp. (MMM) also showed a significant move to the downside after reporting first quarter earnings that matched estimates but lowering its full-year guidance.

Shares of Google parent Alphabet (GOOGL), Travelers (TRV) and Coca-Cola (KO) also moved lower after the companies reported their quarterly results.

Selling pressure may also have been generated by a continued increase in U.S. treasury yields, with the yield on the benchmark ten-year note climbing above 3 percent for the first time since early 2014.

The increase in treasury yields came following the release of some upbeat economic data, including a report from the Commerce Department showing a bigger than expected increase in new home sales in the month of March.

The report said new home sales soared by 4.0 percent to an annual rate of 694,000 in March after surging up by 3.6 percent to a revised rate of 667,000 in February. Economists had expected new home sales to climb by 1.9 percent.

With the bigger than expected increase, new home sales rose to their highest annual rate since hitting 711,000 last November. New home sales were up by 8.8 percent year-over-year.

A separate report from the Conference Board showed an unexpected improvement in consumer confidence in the month of April.

The Conference Board said its consumer confidence index rose to 128.7 in April from a revised 127.0 in March. Economists had expected the index to dip to 126.1.

Chemical stocks moved sharply lower over the course of the trading session, dragging the S&P Chemical Sector Index down by 2.5 percent.

DowDuPont (DWDP), Ingevity (NVGT) and Huntsman (HUN) turned in some of the chemical sector’s worst performances on the day.

Significant weakness also emerged among transportation stocks, as reflected by the 2.1 percent slump by the Dow Jones Transportation Average.

Retail, biotechnology, housing, and tobacco stocks also saw considerable weakness, while gold stocks bucked the downtrend amid an increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are slipping $0.23 to $67.47 a barrel after sliding $0.94 to $67.70 a barrel on Tuesday. Meanwhile, after climbing $9 to $1,333 an ounce in the previous session, gold futures are tumbling $12 to $1,321 an ounce.

On the currency front, the U.S. dollar is trading at 109.23 yen compared to the 108.82 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2175 compared to yesterday’s $1.2233.

Asia

Most Asian stocks fell on Wednesday as profit warnings from bellwether U.S. companies and worries about rising bond yields kept investors on edge. Australian and New Zealand markets were closed for Anzac Day.

The dollar edged up after the ten-year U.S. Treasury yield climbed above 3 percent for the first time since early 2014 on Tuesday.

Gold prices fell on dollar strength and easing geopolitical tensions, while oil held stable but below recent highs following reports that the U.S. and France are close to reaching an agreement to preserve the Iran nuclear deal.

Chinese shares fell after reports that the government is considering unveiling new rules to govern the asset management industry.

The benchmark Shanghai Composite Index slid 10.93 points or 0.4 percent to 3,118.00, while Hong Kong’s Hang Seng Index slumped 308.09 points or 1 percent to 30,328.15.

Japanese shares fell on worries about higher interest rates and ahead of upcoming earnings results. The Nikkei 225 Index shed 62.80 points or 0.3 percent to end at 22,215.32, and the broader Topix Index closed 0.1 percent lower at 1,767.73.

Semiconductor equipment manufacturer Tokyo Electron lost 2 percent ahead of its earnings release later in the day. Canon dropped 1.6 percent before announcing its first quarter results.

Takeda Pharmaceutical slumped as much as 7 percent after it struck a deal to buy Irish drug maker Shire for about $65 billion.

Kobe Steel declined 3.6 percent after the company confirmed it is under investigation by Japanese authorities over its data tampering.

Meanwhile, Honda Motor, Toyota Motor and Mazda Motor all gained around 1 percent as the dollar rose to 109.16 yen from 108.82 yen.

Seoul stocks fell notably even as technology stocks recovered some ground following downbeat news from chipmaker SK Hynix. The benchmark Kospi dropped 15.33 points or 0.6 percent to 2,448.81.

SK Hynix reversed early losses to finish 0.4 percent higher, while Samsung Electronics ended roughly flat after recouping initial losses.

On the data front, South Korean consumer confidence weakened for the fifth consecutive month in April, survey data from Bank of Korea showed. The consumer sentiment index fell to 107.1 in April from 108.1 in March.

Europe

European stocks are broadly lower on Wednesday after Wall Street stocks sold off overnight on concerns over rising bond yields. Corporate earnings also proved to be a mixed bag, weighing on investor sentiment.

While the German DAX Index has slumped by 1.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are down by 0.7 percent and 0.6 percent, respectively.

Swiss specialty chemicals company Clariant has fallen sharply after posting stagnant profit margins for the first quarter.

Germany’s Deutsche Boerse has also dropped after announcing personal and structural changes to its executive board.

Meanwhile, Credit Suisse shares have jumped percent after the Swiss investment bank posted its strongest quarterly earnings in three years, underpinned by strong growth in its wealth management division.

STMicroelectronics has also rallied after its first quarter profits more than doubled, driven by sales growth across all product groups.

Kering has also soared after the luxury goods company reported “spectacular growth” by Gucci in its first quarter results.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended April 20th at 10:30 am ET.

Crude oil inventories are expected to decrease by 2.6 million barrels after falling by 1.1 million barrels in the previous week.

At 1 pm ET, the Treasury Department is due to announce the results of its auction of $35 billion worth of five-year notes.

Stocks In Focus

Shares of Texas Instruments (TXN) are moving sharply higher in pre-market trading after the chipmaker reported better than expected first quarter earnings and provided upbeat guidance for the current quarter.

Social media giant Twitter (TWTR) may also see early strength after reporting first quarter results that exceeded analyst estimates.

Shares of Anthem (ANTM) are also seeing pre-market strength after the health insurer reported first quarter earnings that beat expectations and raised its full-year guidance.

On the other hand, shares of Comcast (CMCSA) may move to the downside after the cable giant formalized a $31 billion bid for European television giant Sky.

Casino operator Wynn Resorts (WYNN) is also seeing pre-market weakness after reporting better than expected first quarter earnings but weaker than expected revenues.

Shares of Edwards Lifesciences (EW) may also come under pressure after the medical device maker provided disappointing second quarter guidance.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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