Earnings Worries and Global Currents Deepen Gloom on Wall Street

Nichole Harper
13 Apr, 2015
New York City

Market indexes opened higher but quickly began descending. Market sentiment was weak on the unexpected shrinkage in China trade, ongoing worries in the euro zone and lack of confidence in the lowered earnings outlook in the U.S.

[R]3:50 PM New York – Market indexes opened higher but quickly began descending. Market sentiment was weak on the unexpected shrinkage in China trade, ongoing worries in the euro zone and lack of confidence in the lowered earnings outlook in the U.S.[/R]

Market indexes opened higher but lost momentum and steadily declined as trading progressed and news flow picked up.

Weaker than expected from China overshadowed trading in commodities pits and investors looked ahead this week on economic data on retail sales and earnings from banks.

On Wall Street trading, Tollbooth Strategy Index gained 0.2% or 18.58 to 10,761.90.

S&P 500 index edged up 0.36 or 0.02% to 2,102.48 and the Nasdaq Composite Index rose 16.63 or 0.3% to 5,012.61.

Crude oil in New York increased 20 cents to $51.84 a barrel and gold slipped $3.90 to $1,200.70 an ounce.

U.S. Movers

Builders FirstSource, Inc ((BLDR)) surged 55.1% or $3.80 to $10.70 after the building products maker agreed to acquire its rival and privately held professional building materials supplier ProBuild Holdings LLC for $1.63 billion in cash.

The transaction is expected to close in the second-half of this year.

The Habit Restaurants, Inc ((HABT)) gained 1.8% or 57 cents to $31.57 after restaurant and bar operator priced its 5 million shares offering at $30.96 per share.

JetBlue Airways Corporation ((JBLU)) soared 6.1% or $1.16 to $20.20 after the airline said traffic in March climbed 9.2% to 3,537,850 passengers and load factor jumped 2.4 percentage point to 87.2%.

European Markets

In London trading, FTSE 100 index fell 0.4% or 27.08 to 7,062.69 and in Frankfurt the DAX index slid 0.3% or 32.40 to 12,342.33.

In Paris, CAC 40 index rose 0.2% or 12.17 to 5,252.63.

Dassault Aviation SA jumped 2.1% to €1200 after the France-based civil and military aircrafts maker secured an order to supply 36 Rafale aircrafts to defense ministry of India in a substantial deal worth $20 billion.

Henkel AG & Co KGaA fell 0.4% to €114.70 after the Germany-based specialty detergents maker forecasted organic sales for the fiscal 2015 between 3% and 5% and adjusted return on sales 16%.

The company said adjusted earnings per share for the year to increase about 10%.

Orad Hi Tec Systems Ltd surged 35.8% to €5.45 after the Israel-based electro-optical, video services provider agreed to buy the U.S.-based Avid Technology Inc for €5.67 per share in cash.

The transaction is expected to close in June.

Shares of Orad Hi-Tec Systems Ltd surged 35.8% to €5.45.

Asian Markets

Stocks in Tokyo edged lower after domestic core machinery orders in February declined and China reported worst trade data in nearly a year. Genky Stores, drug retailer, said nine-month net income doubled.

Stocks in Tokyo declined after a weeklong rally on the weaker than expected domestic machinery orders and China reported worst trade data in a year.

Seasonally adjusted core machine orders in February dropped 0.4% to 835.6 billion yen followed by 1.7% decline in January, the Cabinet Office said today.

On a yearly basis, core machine orders climbed 5.9% from 1.9% increase in the previous month.

In February, orders in manufacturing sector increased 0.9% to 355.2 billion yen but non-manufacturing orders slumped 3.6% to 476.9 billion yen.

Total orders, including domestic and exports, decreased 1.4% to 2,474.5 billion yen.

China’s customs agency said exports declined 15% in March and imports fell 12.7% on the rising yuan and slowing domestic demand.

The surprise contraction in China’s trade dragged March month surplus to $3.1 billion, sharply lower than the expected surplus of $45.4 billion.

Rising financing and labor cost eroded China’s manufacturing sector advantage and companies in Vietnam, India and other Asian countries begin to take bite out of various industries.

For the March quarter, exports increased 4.7% and imports plunged 17.6%.

The Nikkei 225 Stock Average edged down 2.17 to 19,905.46 and the broader Topix index slid 3.28 to 1,586.26.

The yen eased to close at 120.38 against a dollar.

Stocks in Mumbai traded higher and extended one-week long rally as the central government announces a plan to accelerate the sell-off of stakes in public sector companies.

The government has set the target to raise ₹69,500 crore through the disinvestment in the current fiscal year, Disinvestment Secretary Aradhana Johri said.

Johri added the central government has no plan to sell Coal India stake at least for the next six months and ONGC stake sale is likely to be revived if oil price rebounds.

Rupee weakened 20 paisa 62.51 against one dollar.

The Sensex Index advanced 165.06 or 0.6% to close at 29,044.44. The CNX Nifty gained 53.65 or 0.6% to 8,834.

Retail price inflation as measured by consumer price index increase slowed to 5.17% in March from a year ago month after rising at 5.37% in February.

Food prices, which is half the total consumer basket, increase declined to 6.14% from 6.79% in February.

After the close, statistics office released consumer price index data.

Larsen & Toubro Limited added 2.3% to ₹1,801.95 after the engineering infrastructure maker signed an agreement with Franch-based Areva for the building of 9,900 megawatt nuclear plant at Jaitapur in Maharashtra.