Wall Street Turns Lower A Day After Rate Hike, Stable World Markets

Nichole Harper
17 Dec, 2015
New York City

A day after rate hike, stocks on Wall Street traded lower and investors shifted focus to latest weekly jobless claims. Unemployment claims declined 11,000 in the previous week. FedEx and Oracle diverged on earnings. European markets jumped on widening economic activities.

[R]11:35 AM New York City, New York – A day after rate hike, stocks on Wall Street traded lower and investors shifted focus to latest weekly jobless claims. Unemployment claims declined 11,000 in the previous week. FedEx and Oracle diverged on earnings. European markets jumped on widening economic activities.[/R]

Global stocks surged after the much anticipated Fed move on the interest rate materialized but stocks on Wall Street day after settled and looked down.

Federal Reserve lifted its benchmark rate to 0.25% from near zero in a unanimous decision and said future rate increases will be gradual and dependent on the inflation pick up.

Stocks surged on Wall Street after the rate hike but settled and shifted focus to the latest weekly jobless claims.

Seasonally adjusted weekly jobless claims declined 11,000 to 271,000 from the previous week’s unrevised claims of 282,000.

The preliminary insured unemployment rate in the week ending December 5 was 1.7% unchanged from the prior week''s unrevised rate, the Department of Labor said.

The U.S. preliminary current account deficit widened to $124.1 billion in the third-quarter from the revised $111.1 billion in the second-quarter, the Department of Commerce said.

Goods and services deficit in the quarter increased $133.7 billion and exports fell to $379.9 billion and imports declined $569.9 billion.

On Wall Street, Tollbooth Strategy Index slipped 31.55 or 0.3% to 10,917.20.

S&P 500 index dropped 16.46 or 0.8% to 2,056.23 and the Nasdaq Composite Index slipped 30.27 or 0.6% to 5,041.04.

Crude oil in New York slid 61 cents to $34.91 a barrel and gold plunged $20.15 to $1,052.17 an ounce.

U.S. Movers

FedEx Corporation ((FDX)) soared 4.6% or $6.79 to $155.51 after the air freight and logistics company reported revenues in the second-quarter ending in November jumped 4% from a year ago to $12.45 billion.

Net income in the quarter advanced 4.2% to $691 million or $2.44 per diluted share compared to $691 million or $2.31 per share from the same quarter last year.

FedEx said revenues for its express business declined 6% to $6.59 billion while revenues in ground segment soared 32% to $4.05 billion from and revenues in freight business slumped 2% to $1.55 billion.

The air freight company forecasted adjusted earnings per share for 2016 between $10.40 and $10.90.

Oracle Corporation ((ORCL)) slumped 3.5% or $1.38 to $37.53 after the enterprise software developer reported revenues in the second-quarter ending in November plunged 6% from a year ago to $8.99 billion.

Net income in the quarter tumbled 12% to $2.20 billion or 51 cents per diluted share compared to $2.50 billion or 56 cents per share from the same quarter last year.

Oracle said revenues in total cloud and on-premise software business dropped 4% to $7 billion and revenues hardware business plummeted 16% to $1.12 billion while total services revenues declined 8% to $861 million.

European Markets

Stock markets across Europe surged on Thursday after the U.S. Federal Reserve increased its benchmark interest rate for the first time in nine years, and the latest releases of European economic data signaled an upward trend.

Seasonally adjusted construction activities in September rose 0.5% in euro zone and 0.1% in the wider region of EU28 from September.

In September, activities in the euro zone fell 0.7% and 0.2% in EU28, the Statistical Office of the European Communities said.

Compared to year ago month activities in the euro zone grew 1.1% and 1.2% in the wider region of EU28.

U.K. retail sales in November increased 1.7% from October and surged 5% from a year ago month.

Retail spending increased to £28.8 billion and online sales jumped 12.7% from a year ago month, the Office for National Statistics said.

In London trading, FTSE 100 index jumped 82 or 1.4% to 6,140.88 and in Frankfurt the DAX index advanced 321.32 or 3.1% to 10,788.63.

In Paris, CAC 40 index soared 102.34 or 2.2% to 4,728.88.

AstraZeneca Plc gained 13% to 4,470 pence after the U.K.-based biopharmaceutical company agreed to acquire 55% stake in Netherland-based privately held cancer and autoimmune specialist Acerta Pharma, the maker of blood cancer drug acalabrutinib for about £2.68 billion or $4 billion.

The company has an option to acquire remaining stake of 45% for $3 billion but only if the drug gets approval in the U.S.

Astra said initial payment of the $2.5 billion will ""moderately dilute"" earnings in the near-term.

The transaction is expected to close by the end of the first-quarter of 2016.

E.ON SE soared 5.6% to €8.78 after the Germany-based energy solution provider agreed to acquire Italy-based commercial and industrial high efficient on-site energy service provider Heat & Power for undisclosed financial terms.

Asian Markets

The Nikkei 225 average jumped 1.6% after trade deficit in November narrowed and the U.S. Fed raised its key lending rate. Toyota lifted 2016 global sales outlook by 1.1%. TDK plans to acquire Switzerland-based semiconductor designer.

Tokyo stocks jumped to a one-week high after the U.S. Federal Reserve announced the anticipated rate hike and the yen weakened against the dollar.

Investors also took note of the trade deficit decline, largely on the decline in the cost of the energy imports.

In November, the trade deficit narrowed to 379.7 billion yen from 379.7 billion a year ago, according to data released by the Ministry of Finance.

Exports declined 3.3% in November, but imports plunged 10.2% from the same month last year, the ministry said.

Toyota will invest 1 billion yen in Preferred Networks for the development of artificial intelligence in mobility-related fields.

TDK plans to acquire Switzerland-based Micronas Semiconductor for about 26.28 billion yen.

The Nikkei 225 Stock Average advanced 303.65 or 1.6% to 19,353.56 and the broader Topix index increased 23.99 to 1,564.71.

The yen fell against the dollar to 122.36.

Stocks on Dalal Street gained following a rally in Asia sparked by the widely anticipated rate increase in the U.S.

The natural gas companies closed higher for the second day after the Supreme Court ruled that all Delhi taxis be converted to CNG by the end of March 2016.

Steel makers gained after the central government ordered to curb imports.

Tata Steel advanced 2.6%, JSW Steel gained 2.5% and Steel Authority of India increased 1.9%.

Rupee strengthened 31 paisa to ₹66.42 against one U.S. dollar.

The Sensex Index increased 309.41 or 1.2% to close at 25,803.78. The CNX Nifty gained 93.45 or 1.2% to 7,844.35.

Reliance Infra acquired additional 17% stake in Pipavav Defence and increased its holding in the company to 35%.