Wall Street Down Ahead of Fed Minutes, Greece in Focus in Europe

Nichole Harper
20 May, 2015
New York City

Market indexes on Wall Street lacked direction ahead of Fed minutes and investors focused on latest batch of earnings. European markets struggled and Greek lawmakers resisted the next loan payment in June without revisions to agreements with international lenders.

[R]2:00 PM – Market indexes on Wall Street lacked direction ahead of Fed minutes and investors focused on latest batch of earnings. European markets struggled and Greek lawmakers resisted the next loan payment in June without revisions to agreements with international lenders.[/R]

Stocks lacked direction on Wall Street by late afternoon as indexes hovered near record highs and Fed was scheduled to release latest minutes of meeting at 2:00 p.m. ET.

Fed is widely expected to raise rates this year, but the timing and the nature of rate hike has kept market guessing.

In morning trading, investors focused on the latest batch of earnings and Target Corp jumped after the retailer reported better-than-expected sales but Lowe’s reported lower-than-expected sales and earnings.

The recently listed Etsy plunged 23% to $16.25 after the operator of online marketplace for craft goods reported a larger loss in the first quarter as a public company.

On Wall Street, Tollbooth Strategy Index slipped 0.2% or 21.88 to 10,792.67.

S&P 500 index edged down 0.49 to 2,127.37 and the Nasdaq Composite Index edged up 1.34 to 5,071.41.

Crude oil in New York rose 82 cents to $58.81 a barrel and gold gained 0.90 to $1,207.60 an ounce.

Five Banks Agreed to Pay $5.8 Billion to U.S. Fines

Five banks in the U.S. and U.K. were charged with multiple crimes linked to foreign currencies and interest rates violations by state and federal authorities on Wednesday.

The fines totaled more than $5 billion, but many analysts believe that banks got off cheap considering the enormity of violations.

The currency market trades daily $5 trillion and is one of the least regulated markets, prosecutors said today.

The rate ‘rigging’ was done nearly every day for five years to 2012 as traders will agree to a price for buy and sale in advance at the expense of customers.

What is different about these charges is that the current violations are pinned down to the parent companies unlike previous violations stemmed from the banking subsidiaries or smaller divisions at the large banks.

In a sharply worded but standard warning issued by regulators failed to win many critics of the Department of Justice. And, the prearranged deal with the SEC only added to the skepticism on Main Street.

U.S. Movers

Target Corporation ((TGT)) rose 11 cents to $78.04 after the after the specialty retailer stated net sales in the first-quarter ending on May 2 rose 2.8% to $17.1 billion from a year ago period.

Comparable store sales in the quarter increased 2.3%.

Net earnings in the quarter surged 51.6% to $635 million or 98 cents per diluted share compared to $418 million or 66 cents from the same quarter last year.

The company estimated second quarter 2015 adjusted earnings per share between $1.04 and $1.14, compared to $1.01 in second quarter 2014.

The retailer lifted adjusted earnings per share forecast for the year to between $4.50 and $4.65 compared to prior guidance range of $4.45 to $4.65.

Lowe’s Companies, Inc ((LOW)) declined 4% or $2.88 to $68.95 after the home improvement retailer said net sales in the first-quarter ending on May 1 jumped 5.4% to $14.1 billion from a year ago period.

Comparable store sales in the quarter rose 5.2%.

Net earnings in the quarter advanced 7.8% to $673 million or 70 cents per diluted share compared to $624 million or 61 cents from the same quarter last year.

European Markets

Seasonally adjusted construction activities in March rose 0.8% in euro area and 1.5% in the wider region of EU28 compared to a month ago, the Statistical Office of the European Communities said.

In London trading, FTSE 100 index edged up 4.47 to 6,999.57 and in Frankfurt the DAX index decreased 0.4% or 50.99 to 11,802.34.

In Paris, CAC 40 index fell 0.3% or 16.97 to 5,100.33.

Altice SA climbed 8.2% to €125.50 after the France-based cable and wireless services provider agreed to acquire controlling stake of 70% in the U.S.-based privately held cable operator Suddenlink Communications for $9.1 billion.

However, BC Partners and CPP Investment will retain their stake of 30% in Suddenlink.

Altice operates in Europe and in the Caribbean countries with about 6.5 million of fixed-line customers and 22.5 million wireless customers.

Suddenlink is the Missouri-based 7th largest U.S. cable TV operator with 1.5 million residential customers and 90,000 business customers.

The transaction is expected to close in the fourth-quarter.

Marks and Spencer Group Plc gained 0.5% to 588.37 pence after the U.K.-based specialty retailer stated revenues in the year ending in March was flat at £10.3 billion from a year ago period.

Net profit in the year dropped 4.8% from a year ago to £481.7 million compared to £506 million and diluted earnings per share slipped to 29.5 pence from 32.2 pence.

The retailer said U.K. revenues in the year increased 0.7% and revenues in food business jumped 3.4% while revenues from general merchandise segment declined 2.5% and online sales in the year slumped to 2% and sales in the international business declined 5.7%.

Asian Markets

Japan reported better than expected first-quarter economic growth of 0.6% and the U.S. dollar rose to a two-month high. On an annual basis, the GDP increased 2.4%.

Nikkei average jumped to a 15-year high. Next Co, the online real estate information provider said annual sales jumped 42%.

Market averages in Japan closed higher and the Nikkei 225 average jumped to a 15-year high after the government reported better-than-expected first-quarter economic growth.

The economy expanded at a faster pace but components in the gross domestic product showed weakness and raised prospect of lack sustainability in the expansion.

In a preliminary reading gross domestic product in first-quarter jumped 0.6% from the downwardly revised 0.3% rate of growth in the fourth-quarter, the Cabinet Office said.

The government added on a yearly basis, first-quarter GDP increased 2.4% from the downwardly revised 1.5% increase in the previous quarter.

The Nikkei 225 Stock Average jumped 170.18 or 0.8% to 20,196.56 and the broader Topix index gained 10.07 to 1,643.40.

The yen closed at 120.98 against a dollar.

Stocks in Mumbai opened higher and extended gains in the session and the rupee eased.

Rupee weakened 15 paisa to 63.82 against one U.S. dollar.

The Sensex Index jumped 191.68 or 0.7% to close at 27,837.21. The CNX Nifty rose 57.60 or 7% to 8,423.25.

Reliance Industries Limited increased 1.3% to ₹907.40 after the conglomerate plans to raise up to ₹10,000 crore through non-convertible debenture offering.

In a regulatory filing with the Bombay Stock Exchange, the company sought approval of capital raising from shareholders and announced annual general meeting on June 12.