The US session is over and traders are getting ready for Thursday. So are we.
US stocks ended mixed after better-than-expected Chinese growth data failed to incite a rally.
Health care and telecommunications were the weakest sectors in a range-bound session. Meanwhile, Qualcomm (QCOM) continued its ascent and finished 12% higher. The chip maker started its rally yesterday after it announced a settlement with Apple (AAPL).
Today was a big day for copper, a key import for China. Copper futures for July jumped 1.5%.
But oil futures slipped, retracing earlier gains, as uncertainty about global supplies continues.
While China’s better-than-expected first quarter GDP data eased worries about slowing demand, data from the Energy Information Administration showed a drop in crude inventories.
WTI futures for May settled 0.6% lower.
The so-called Misery Index, the inverse of a Goldilocks scenario, is at a record low. If this is as low as it will go, however, this would mean that things are only going to get worse from here.
The misery index plots inflation and unemployment as a measure of how the average citizen is doing.
“We expect the misery index to trough in the next year,” Luca Paolini, chief strategist at Pictet Asset Management.
It will happen either because the Federal Reserve allows the market and the economy to overshoot and inflation rises, or “because the global economy enters a recession, a shallow one, but still a recession” and unemployment rises, he added.
At the moment, low employment means solid economic growth, which translates to good earnings growth. Meanwhile, low inflation typically results in low real rates and good liquidity conditions.
Sure, the Fed has been raising interest rates, but on the whole, global real rates have barely budged. But caution is advised.
China delivered some surprisingly good news about its economic growth. And that is a great sign for global markets.
The Chinese government reporting better-than-expected Q1 growth of 6.4% will likely give a “boost” to the country’s trading partners, Charles Scwab investment strategist Liz Ann Sonders said during the “Markets Now” live show.
But it’s wise to be cautious. Firm news about a potential US-China trade deal will be important, because there’s a chance investors have been operating on a “buy on the rumor sell on the news” mentality that could warp markets.
As far as looming concerns about a global recession, Sonders said it’s too soon to assume we’re in the clear.
She pointed out that the international OECD’s March update declared global growth reached its peak mid-way through last year. And the global growth rate, which has been below 3%, is still “generally considered a global recession.”
Casper’s chief executive has high hopes for the IPO market — despite a so-so debut from Lyft earlier this month.
Lyft, which became the first so-called Unicorn to go public this year, could have been a “one-off,” CEO Philip Krim told CNN Business’ Julia Chatterley during the “Markets Now” live show, and there’s still plenty to look forward to.
Krim said he’ll keep an eye out for other big-name IPOs from companies like Uber.
Reuters reported recently that Casper is mulling a public listing of its own, but Krim declined to confirm the rumors.
Half-way through the trading session, stocks edged lower.
UnitedHealth (UNH) was the biggest loser in the Dow and dropped more than 4%, as healthcare stocks continue to suffer on worries about how the politics of healthcare could change the industry.
IBM (IBM), which reported a drop in revenues before the bell, was dragged down nearly 3%.
In the S&P, BNY Mellon (BK) is faring the worst, falling almost 10% on the back of weaker-than-expected first quarter results.
Health care companies couldn’t catch a break today and added on to their previous losses.
The industry-wide selloff came on the back of comments from UnitedHealth CEO David Wichmann saying “Medicare for all” proposals could “destabilize the nation’s health system”.
The monthly trade deficit fell by 3.4% to $49.4 billion in February, hitting its lowest level in eight months, according to data released Wednesday by the Census Bureau.
For the second month in a row, the trade deficit with China also narrowed as the United States continues to negotiate a trade deal with Beijing.
Exports to China increased by $1.6 billion and imports fell by $1.5 billion.
Last year, President Donald Trump imposed tariffs on $250 billion of Chinese goods, in an effort to pressure Beijing to come to the negotiating table, but saw the trade deficit climb as importers scrambled to stockpile goods ahead of further threatened tariffs.
Qualcomm’s (QCOM) settlement with Apple (AAPL) has sent its stock soaring to 5-year high, our David Goldman notes.
The stock closed 23% higher Tuesday and is up another 12% today. Here’s a look at its rise:
US stocks started the session mixed. China’s GDP report for the first quarter was better than expected but still failed to incite a rally in risk-sensitive assets like stocks.
Chip maker Qualcomm (QCOM), which was Tuesday’s best performer in the S&P with a 23% jump after settling its dispute with Apple (AAPL), continued to ascend. The stock was last up 16%.
BNY Mellon (BK) dropped 8% following first quarter earnings that failed to meet estimates before the bell.
I sound like a broken record. Here’s why:
Individual stocks are the story, based on earnings results, but two recent macro comments from top CEOs stand out:
Certainly, there are bigger picture worries about President Trump’s criticism of the Fed and his choices for vacant positions on the Board of Governors.
Tensions are flaring between the US and the EU over Airbus and Boeing subsidies and the trade deal between the US and China is still not finished.
But for now, the path of least resistance, appears higher.
Buoyant economic data from China could have sent risk assets through the roof, but the market reaction has been a bit muddled.
All over, analysts are grappling with why 6.4% first quarter GDP growth – more than expected and a rebound from the previous quarter – didn’t lead to popping champagne corks.
Industrial production numbers were also strong at 8.5%, compared with some 6% expected, and retail sales beat expectations at 8.7% in March.
This might give some investors pause. On top of that, the US-China trade conflict is still not resolved.
Asia stocks ended Wednesday’s session higher, with the Shanghai Composite (SHCOMP) rising 0.3%. US stock futures are pointing to a higher open. But on the whole, market participants appeared underwhelmed, especially given the fallout from weaker-than-expected Chinese data late last year.
In one asset, however, traders have taken the data at face value. Copper prices jumped on Wednesday and “broke above a short-term corrective trend”, said Fawad Razaqzada, market analyst at Forex.com, and could climb further. Copper futures for July were up 1.3%
The grounding of American Airlines’ Boeing 737 Max planes has forced the airline to cancel flights into mid-August. But the impact that has on its bottom line remains unclear.
This is what American Airlines (AAL) said in a new regulatory filing:
The stock is up nearly 2% in premarket trading.
Morgan Stanley (MS) reported better-than-expected earnings in the first quarter, but sales fell.
Investment banking rival Goldman Sachs (GS) showed similar patterns in its results on Monday.
The bank’s net revenue was $10.3 billion between January and March, down 7% thanks to a 24% and 15% drop in revenues from investment banking and sales and trading, respectively. Earnings per share were $1.39, more than analysts had expected.
“We delivered solid earnings despite a slow start to the year following the turbulent markets in the fourth quarter,” said CEO James Gorman in a press release.
Morgan Stanley shares were up 2.3% in premarket trading.
Netflix (NFLX) reported in yesterday’s earnings that it beat analysts’ expectations in subscriber numbers and revenue, but the stock is falling in premarket trading.
Here’s why according to our Paul R. La Monica:
Shares of T-Mobile (TMUS) and Sprint (S) stocks are slipping in premarket following a report that the US Department of Justice is unlikely to allow the companies’ proposed $26 billion merger to go forward.
Following the Wall Street Journal report Tuesday, both Sprint’s and T-Mobile’s stocks tumbled. Here’s where they stand right now:
T-Mobile CEO John Legere punched back at the story on Twitter, posting that the “premise of this story, as summarized in the first paragraph, is simply untrue.”
Chip maker Qualcomm (QCOM) closed 23% higher on Tuesday, after it announced it reached a settlement and license agreement with Apple (AAPL) over patents.
The two companies will still work together. Apple and Qualcomm announced a new six-year license contract, with the option to add two more years. It also announced a multi-year chipset supply agreement.
Intel (INTC) shares are up 4% in premarket trading after it announced it will stop making 5G chips for smartphones. Apple used Intel chips in their iPhone XS line, but faced a shaky future with the company because of today’s Qualcomm deal.
Shares of PepsiCo (PEP) rose about 2% before trading hours on Wednesday after the company reported earnings that beat Wall Street’s expectations.
The beverage company Frito-Lay business was particularly successful in North America. Organic sales of Frito-Lay, which includes Cheetos, Lay’s, Doritos, Sun Chips, Fritos and more, grew 6% in the most recent quarter, PepsiCo said. The company’s North American beverage business also performed well, with 2.5% growth in organic sales.
Ramon Laguarta, PepsiCo CEO since October, said he is “pleased” with the results, noting that “Frito-Lay North America … delivered particularly strong operating performance.”
Overall, net revenue grew 2.6% to $12.9 billion in the first quarter, a result that Laguarta said was negatively affected by foreign exchange rates. He added that organic growth for the quarter was over 5%.
China’s economy grew slightly more than expected in the first quarter of 2019, official data showed Wednesday.
It expanded by 6.4% compared to a year ago, beating economists’ forecasts of 6.3%.
