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Stock Market News for April 20, 2016

Benchmarks finished mostly in the green on Tuesday following a strong rebound in oil prices. However, losses in technology and consumer discretionary stocks following weaker-than-expected earnings results dampened investor sentiment. Both the Dow and the S&P 500 closed at their highest settlement so far this year. Moreover, it was the first time that the S&P 500 crossed the psychological level of 2100 since Dec 1.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
 
The Dow Jones Industrial Average (DJI) increased 0.3%, to close at 18,053.60. The S&P 500 also rose 0.3% to close at 2,100.80. However, the tech-laden Nasdaq Composite Index closed at 4,940.33, losing 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 0.8% to settle at 13.24. A total of around 7.1 billion shares were traded on Tuesday, higher than the last 20-session average of 6.7 billion shares. Advancers outpaced declining stocks on the NYSE. For 67% stocks that advanced, 29% declined.
 
Oil prices rebounded on the back of disruptions in crude production around the globe. Kuwait’s’ oil worker strike moved into its third day, due to which crude output declined by 1.3 million barrels per day. Moreover, Nigeria’s pipeline problems reduced output by another 440,000 barrels. Both the WTI crude and Brent crude rose 3.2% and 2.5% to $41.08 per barrel and $44.03 a barrel, respectively.
 
Rebound in oil prices helped the Energy Select Sector SPDR (XLE) increase 2%. It was also the second biggest gainer among the S&P 500 sectors. Dow components Chevron Corp (CVX) and Exxon Mobil Corp (XOM) rose 1.8% and 0.5%, respectively. Other key energy stocks including, Transocean Ltd. (RIG), Schlumberger Limited (SLB), Kinder Morgan, Inc. (KMI), Pioneer Natural Resources Co. (PXD), EOG Resources (EOG) and ConocoPhillips (COP) advanced 9.5%, 2.8%, 3.6%, 3.3%, 2.2% and 4.6%, respectively.
 
Additionally, shares of Goldman Sachs Group, Inc. (GS) increased 2.3% after the company reported first-quarter earnings per share of $2.68, outpacing the Zacks Consensus Estimate of $2.57. Goldman Sachs was the biggest advancer among the Dow components. However, its net quarterly revenue of $6.3 billion fell short of the Zacks Consensus Estimate of $7.1 billion.
 
Moreover, shares of Johnson & Johnson (JNJ) increased 1.6% after the company’s first-quarter earnings came in at $1.68 per share, beating the Zacks Consensus Estimate of $1.64. Its revenues came in at $17.5 billion higher than the Zacks Consensus Estimate was $17.4 billion. J&J now expects 2016 earnings of $6.53 - $6.68 per share on revenues of $71.2 billion-$71.9 billion as compared to the Zacks Consensus Estimate for earnings and revenues is $6.52 and $71.5 billion, respectively.
 
However, shares of International Business Machines Corporation (IBM) declined 5.6% after reporting first quarter non GAAP earnings per share of $2.35 and revenues of $18.684 billion, declining 19.2% and 4.6%, respectively, year-on-year. However, both earnings and revenues figures surpassed the respective Zacks Consensus Estimate of $2.09 and $18.305 billion. Decline in IBM dragged technology stocks downward.
 
The Technology Select Sector SPDR (XLK) decreased 0.6% and was the biggest decliner among the S&P 500 sectors. Dow components, Apple Inc (AAPL) and Microsoft Corp (MSFT) declined 0.5% and 0.1% respectively.  Some of the other main components including Alphabet Inc (GOOGL), Visa Inc. (V) and Broadcom Limited (AVGO) fell 1.5%, 0.9% and 3.1%, respectively.
 
Further, shares of Netflix, Inc. (NFLX) slumped 13% after its first quarter revenues came in at $1.958 billion, which missed Zacks Consensus Estimate of $1.965 billion. Also, for the second quarter the company currently forecasts 500,000 net domestic subscriber gains and 2 million net international subscriber gains. Previously, analysts’ estimates were 586,000 net domestic adds and 3.5 million international adds. Also, the company expects earnings of $0.02 per share for the second quarter, lower than the Zacks Consensus Estimate of $0.05.
 
Netflix was the biggest decliner in the Consumer Discretionary Select Sector SPDR (XLY), which also decreased 0.6%. Key components including Comcast Corporation (CMCSA), Time Warner Inc. (TWX), Priceline Group Inc. (PCLN), Home Depot, Inc. (HD) and Amazon.com, Inc. (AMZN) fell 0.3%, 0.5%, 0.6%, 1% and 1.2%, respectively.
 
Additionally, shares of Illumina Inc. (ILMN) plunged 23.2%, after the company expects to generate $572 million of revenues in the first quarter most likely missing the Zacks Consensus Estimate by 4.3%. Also, the company’s full-year 2016 revenue growth guidance was cut from earlier projection of 16% to 12%, posting its slowest revenue growth in four years. Plunge in shares of Netflix and Illumina dragged the Nasdaq into the red.
 
In economic news, the U.S. Department of Commerce reported that housing starts decreased 8.8% from February to an annual rate of 1,089,000 in March, reaching its lowest settlement since October. It was also lower than the consensus estimate of an increase to 1,168,000. Additionally, building permits in March decreased 7.7% from February to 1,086,000, hitting its lowest level since March 2015. It was also less than the consensus estimate of a rise to 1,200,000.


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