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US: European events keep investors on edge

Natalia Asedova, Analyst, Global Markets (Finam)

On Thursday, April 5, US equities ended the session largely in negative territory. Concerns about the European debt crisis are back in the spotlight and even upbeat numbers out of the American job market failed to shore up sagging investor sentiment. Volumes were light ahead of the upcoming long-holiday weekend as today US exchanges are closed for Good Friday.

As for the key economic data, initial claims for unemployment benefits, released on Thursday, totaled 357,000 last week after the revised 363,000, i.e. a record low since April 2008. Meanwhile, it should be noted that the indicator slightly missed the forecasts (355,000).

The results of Spain’s bond auction held on Wednesday, April 4, have weighed on American indexes for the second session in a row. Moreover, the yield on Spanish bonds rose 0.1% to 5.76% on Thursday. It should be noted that the yield went up for the third consecutive day, as a result of which the spread between yields on 10-year Spanish and German bonds stood in excess of 4% for the first time since December 12, 2011.

One of Thursday’s highlight events was a speech by Saint Louis Fed president James Bullard who said that the American economy would need no additional stimulus measures as it has been on track and has gone stronger than expected. According to him, the most reasonable decision right now would be to take a pause and try to assess the current economic conditions.

In the indexes, by the closing bell, the Dow Jones Industrial Average eased 0.11% to finish the day at 13,060.14, the Standard & Poor's 500 Index edged down 0.06% to land at 1,398.08 and the technology-heavy Nasdaq advanced 0.40% to finish at 3,080.50.

In commodities, NYMEX light, sweet crude for May delivery jumped 1.8% to USD 103.31/bbl. By the final bell, COMEX gold futures with delivery in April rose 1% to USD 1,628.50/oz. At the same time, the yield on the 10-year Treasury note narrowed from 2.23% to 2.19%.

Of the Dow’s components, the decliners were led by Alcoa and General Electric (off 1.94% and 1.34%, respectively), while S&P 500’s laggards were topped by alcohol producer Constellation Brands that plunged 12% after releasing guidance for future profit that fell short of what most analysts had anticipated.

American maker of videoconferencing equipment Polycom dove 20% after coming out with preliminary Q1 profit and sales numbers that fell shy of the Street’s expectations.

Among the gainers, we’d like to highlight American home goods retailer Bed Bath & Beyond that shot up 8.5%. The stock gained traction on higher-than-forecast quarterly numbers.