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Stock Market News for April 15, 2016

Benchmarks closed mostly in the green on Thursday following continued gains in financial stocks. Gains in Bank of America helped boost financial stocks for the fifth successive trading days, witnessing it for the first time since July. Moreover, jobless claims fell to their lowest level for more than four decades. Both the Dow and the S&P 500 reached at its highest settlement since July, 20 and Dec 4, respectively.

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 0.1%, to close at 17,926.43. The S&P 500 rose 0.36 points to close at 2,082.78. However, the tech-laden Nasdaq Composite Index closed at 4,945.89, losing 1.53 points. The fear-gauge CBOE Volatility Index (VIX) decreased 0.9% to settle at 13.72. A total of around 6.7 billion shares were traded on Thursday, lower than the last 20-session average of 7.1 billion shares. Decliners outpaced advancing stocks on the NYSE. For 53% stocks that declined, 42% advanced.

Shares of Bank of America Corporation (BAC) increased 2.5% despite providing first quarter weaker-than-expected earnings results. Decline in Bank of America’s expense and increase in loan volume had a positive impact on investor sentiment. While expenses reduced by 6% to $14.82 billion for the quarter, its loans increased by 3% to settle at $901.11 billion mainly driven by a 13% rise in commercial loans. Moreover, the management of the bank said that "good consumer and commercial banking activity" have benefitted the bank this quarter.

However, Bank of America posted first quarter earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.22. Its revenues of $19.5 billion for the quarter lagged behind the Zacks Consensus Estimate of $20.5 billion.

The Financials Services Select Sector SPDR (XLFS) gained 0.6%, and was the biggest advancer among the S&P 500 sectors. Dow components JPMorgan Chase & Co. (JPM) and Goldman Sachs Group, Inc. (GS) rose 1.3% and 0.7%, respectively. Top holdings from the sector such as, Citigroup Inc. (C), MetLife, Inc. (MET), American Express Company (AXP) and U.S. Bancorp (USB) increased 1.7%, 1.1%, 0.6% and 0.4%, respectively.

Separately, shares of Wells Fargo & Company (WFC) fell 0.5% following a slump in its net profit on a yearly basis despite reporting better-than-expected earnings results. The bank set aside $1.09 billion to cover oil loan defaults, due to which its first-quarter net income came in at $5.1 billion, down 7% year over year. Its first quarter earnings $1 per share was also lower than prior-year quarter’s earnings of $1.04.

However, Wells Fargo’s quarterly earnings per share beat the Zacks Consensus Estimate by a penny. Its total quarterly revenue came in at $22.2 billion, beating the Zacks Consensus Estimate of $21.6 billion. Further, revenues inched up around 4.2% on a year-over-year basis.

Further, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 13,000 to 253,000 in the week ending April 09, falling to its lowest level since 1973. Initial claims were lower than the consensus estimate of 269,000.

However, the Nasdaq ended in the red after shares of Seagate Technology Public Limited Company (STX) slumped 20.1%. Seagate now expects revenues to be $2.6 billion, down from its earlier guidance range of $2.7 billion. Also, non-GAAP gross margin is anticipated to be 23%, as against its earlier forecast of 25.6%. PC shipments in the first quarter of fiscal 2016 fell 9.6% year over year to 64.8 million units, the lowest level since 2007.

Moreover, oil prices fell yesterday after International Energy Agency (IEA) reported that any production freeze deal in the Doha meeting might not “impact the global supply-demand balance.” IEA also said that “if there is to be a production freeze, rather than a cut, the impact on physical oil supplies will be limited." Both the WTI crude and Brent crude fell 0.6% and 0.8% to $41.50 per barrel and $43.84 a barrel, respectively.

In economic news, the Labor Department reported that Consumer Price Index (CPI) increased 0.1% in March, lower than the consensus estimate of 0.2%. This was preceded by a decrease of 0.2% in February. Core CPI, which excludes food and energy prices, gained 0.1% last month, lower than the consensus estimate of 0.2%. This was preceded by an increase of 0.3% in February.


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