U.S. Stocks Lack Direction, Oil Drops to 6-month Low

Barry Adams
04 Aug, 2022
New York City

Stocks rested on Wall Street after rallying for two days in a row and investors noted the rising bearishness in the energy markets. 

The S&P 500 index was nearly unchanged at 4,155.07 and the Nasdaq Composite index increased 0.3% to 12,708.50. 

Futures of crude oil declined $2.60 to $88.07 a barrel and natural gas fell 14 cents to $8.14 a thermal unit. 

Crude oil futures extended losses this week to 10% and fell to the lows last seen February 3. 

On a weekly basis, West Texas Intermediate crude oil and Brent crude in London are down the most since April on the global recession worries and falling demand from China and rising inventories in the U.S.   

The yield on 10-year Treasury notes edged lower to 2.694% ahead of the monthly payroll survey data tomorrow. 

Initial claims of unemployment at the end of last week rose 6,000 to 260,000, according to the latest report from the Labor Department. 

Earnings season continued and investors are awaiting another batch of earnings after the market closes.  

Internet retailers were in focus after the South America focused Mercado Libre posted results exceeding investors expectations. 

Alibaba Group  said fiscal first quarter revenues increased to 205.6 billion renminbi and net income plunged 50% to 22.73 billion renminbi or 8.51 per American Depositary Share. 

Domestic China commerce business in the quarter declined in mid-single-digit from a year ago on the resurgent coronavirus and widespread lockdowns. 

However, the China commerce business began to improve in late May and June. 

China-focused retailers JD.com and Pinduoduo gained 4% after the release of Alibaba.com quarterly results. 

Ceridian HCM Holding Inc soared 9.8% to $64.89 after the payroll processing company posted second quarter earnings ahead of investor's expectations and issued a third quarter outlook ahead of expectations.   

Revenues increased 20.3% to $301.2 million and net loss shrank to $19.8 million from $25.8 million a year ago. 

The company guided third quarter total revenue between $304 million and $307 million, an increase of 18% to 19% on a GAAP basis and 20% to 21% on a constant currency basis. 

Shake Shack Inc plunged 7.5% to $50.42 after the fast food chain operator reported weaker-than-anticipated quarterly earnings. 

Shake Shack said second quarter revenues increased 23.1% to $230.8 million and same store sales rose 10.1% from a year ago. 

The fast food chain operator swung to a quarterly loss of $1.2 million from $1.9 million a year ago. 

 

Largest Rate Hike In UK In 27 Years, German Factory Orders Fell

European markets traded higher after Germany's factory orders fell less than expected and investors looked beyond the rising tensions between the U.S. and China. 

German factory orders fell 9% on an annual basis in June after dropping 3.2% in May, according to data released by Destatis.

On a monthly basis, orders fell 0.4% in June from May.  

The Bank of England lifted its key lending rate by 50 basis points to 1.75%, the largest increase in twenty seven years. 

The central bank forecasted inflation to peak at 13% and the central bank forecasted economic recession may start as early as this year and last as long as five quarters. 

The DAX index rose 0.6% to 13,661.26, the CAC-40 index increased 0.6% to 6,508.21, and the FTSE 100 index inched up a fraction to 7,446.52. 

Investors reacted to the latest batch of corporate results. 

Credit Agricole SA soared 5% after the French lender reported better than expected earnings but the Dutch lender ING Group fell 2.8% after its quarterly earnings disappointed investors. 

Glencore PLC gained 2.7% after the commodities trader reported first-half profit more than doubled to record high. 

 

Asian Markets Follow Higher Closing In New York 

Stocks in Asia generally closed higher and the indexes in China surged despite the ongoing military exercises near the island nation Taiwan. 

The benchmark index in Japan closed higher following the overnight surge in New York trading. 

Toyota Motors fell 3.0% to 2,091.50 yen  after the largest automaker reported a sharp fall in quarterly profit of 42%. 

Revenues rose 7% to 8.5 trillion yen and comprehensive income plunged 42% to 1.7 billion yen.  

Casio Computer surged 6.3% to 1,386.0 after the electronics company reported second quarter revenues rose 3% 61.3 billion yen and net income declined 6.5% to 5.7 billion yen. 

Subaru Corp jumped 8.3% to 2,386.0 yen after the automaker reported second quarter revenues surged 33% to 834 billion yen and net income soared 47% to 27 billion yen. 

Earnings per share jumped to 35.5 yen from 24.2 yen a year ago. 

The Nikkei 2005 index increased 0.7% to 27,932.20, the Hang Seng index rose 2.2% to 20.174.04. and the Sensex index closed down 0.1% to 58,298.80.