Benchmarks closed in the red on Friday following dismal earnings
results, which had a negative impact on biotech stocks. Also,
continued decline in shares of tech giants weighed on the tech
sector. While the Dow registered its highest weekly decline since
Feb 12, the S&P 500 and the Nasdaq posted the same since Feb 5.
Meanwhile, the Nasdaq posted its worst monthly performance since
January. However, the Dow notched its first three month winning
stretch since January 2014 and the S&P 500 gained for second
straight month for the first time this year.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) decreased 0.3%, to close
at 17,773.64. The S&P 500 fell 0.5% to close at 2,065.30. The
tech-laden Nasdaq Composite Index closed at 4,775.36, losing 0.6%.
The fear-gauge CBOE Volatility Index (VIX) increased 3.2% to settle
at 15.70. A total of around 9 billion shares were traded on Friday,
higher than the last 20-session average of 7 billion shares.
Decliners outpaced advancing stocks on the NYSE. For 55% stocks
that declined, 41% advanced.
Shares of Gilead Sciences, Inc. (
) fell 9.1% after reporting first quarter earnings per share (EPS)
of $2.98, missing the Zacks Consensus Estimate of $3.03. Also,
total revenues of $7.79 billion were well below the Zacks Consensus
Estimate of $8.13 billion. Moreover, Gilead's blockbuster hepatitis
C virus (HCV) drug, Harvoni, plunged 15.7% year over year to $3
billion in the reported quarter.
Decline in Gilead Sciences' shares had a negative impact on
biotech sector, which in turn had an adverse impact on the broader
healthcare sector. The iShares Nasdaq Biotechnology Index (IBB)
dropped 2.6%, while the Health Care Select Sector SPDR (XLV)
decreased 1.6%, becoming the biggest decliner among the S&P 500
sectors. Key stocks from the healthcare sector including Eli Lilly
and Company (
), Amgen Inc. (
), Allergan plc (
) and Celgene Corporation (
) decreased 1.2%, 1.4%, 1.1% and 4.3%, respectively. Dow components
Johnson & Johnson (
), Pfizer Inc. (
) and Merck & Co. Inc. (
) fell 0.4%, 0.6% and 1.6%, respectively.
Moreover, lower-than-expected earnings results from tech giants
continued to weigh on tech sector. The Technology Select Sector
SPDR (XLK) fell 0.9% and was one of the biggest decliner among the
S&P 500 sectors. Some of its major components including
International Business Machines Corporation (
), Apple Inc. (
), Visa Inc. (
), Intel Corporation (
), Alphabet Inc. (
) and Broadcom Limited (
) decreased 0.8%, 1.2%, 0.6%, 3.6% and 1.6%, respectively.
In economic news, the U.S. Department of Commerce reported that
personal consumption expenditure price index (PCE) rose 0.1% in
March, lower than February's increase of 0.2%. Core PCE increased
0.1%, in line with the consensus estimate. However, this was lower
than February's increase of 0.2%.
The U.S. Department of Commerce further reported that personal
income increased by 0.4% or $57.4 billion and disposable personal
income (DPI) also advanced 0.4% or $50.4 billion in March. However,
personal spending increased only 0.1% in March, identical to
February's increase and was less than the consensus estimate of
Further, final reading of consumer sentiment index released by
University of Michigan came in at 89 in March, compared to the
consensus estimate of 90.1 and February's reading of 89.7.
Despite beating its first quarter revenue estimates, shares of
Chevron Corporation (
) fell 0.2% after loss per share came in at 39 cents, wider than
the Zacks Consensus Estimate for a loss of 18 cents. Revenues of
$23,553 million were just above the Zacks Consensus Estimate of
However, shares of Amazon.com, Inc. (
) increased 9.6% after first-quarter EPS of $1.07 beat the Zacks
Consensus Estimate of $0.61. Amazon reported revenue of $29.13
billion, also outpaced the Zacks Consensus Estimate of $27.94
billion. Exxon Mobil Corporation (
) rose 0.4% after first quarter EPS and revenues of 43 cents and
$48,707 million beat the Zacks Consensus Estimate of 31 cents and
$48,137 million, respectively.
Additionally, Monster Beverage Corporation's (
) shares jumped 12.8% after announcing first quarter adjusted EPS
of 80 cents, beating the Zacks Consensus Estimate of 75 cents. Net
sales of $680.2 million also came higher than the Zacks Consensus
Estimate of $660 million. It was the biggest gainer among the
S&P 500 companies.
For the week, the Dow, the S&P 500 and the Nasdaq declined,
1.3%, 1.3% and 2.7%, respectively, following losses in tech and
healthcare stocks. Apple's lackluster quarterly performance and
mixed first quarter earnings results weighed on key U.S. indexes.
However, gain in
had a positive impact on investor sentiment.
Apple's shares declined following weaker-than-expected fiscal
second quarter earnings results primarily because of a year-on-year
drop in iPhone sales. Also, activist investor Carl Icahn sold his
entire stake in Apple following the company's inability to boost
Oil prices increased during the week following weaker dollar and
fall in gasoline inventories. Fed's decision to keep rates
unchanged and Bank of Japan's decision to not to come up with new
stimulus measures to control the yen weakened the dollar.
On earnings front, E. I. du Pont de Nemours and Company's (
), Facebook, Inc. (
), Comcast Corporation (
) and The Boeing Company (
) posted better-than-expected earnings results. Meanwhile, Xerox
), 3M Company (
) and Twitter, Inc. (
) posted disappointing earnings results.
In economic news, fall in new home sales, Consumer Confidence
Index, lower-than-expected rise in durable orders and
slower-than-expected rise in first quarter GDP estimate dragged
However, increase in the S&P/Case-Shiller Home Price Index
(Composite 20), Pending Home Sales Index and decline in total
mortgage application volume boosted investor sentiment.
For the month, the S&P 500 and the Dow advanced 0.5% and
0.3%, respectively, while the Nasdaq declined 1.9%. Energy stocks
were the biggest gainer during the month, while tech stocks were
biggest laggards. Meanwhile, mixed first quarter earnings results
also had a negative impact on markets.
Oil prices posted monthly gains due to weaker dollar, fall in
U.S rig counts, rise in gasoline consumption and worldwide outages
with the WTI crude rising by 24.8% in April.
However, decline in Apple's, Microsoft's, Intel's, Netflix,
) and IBM's shares following disappointing earnings results dragged
tech stocks downward for the month.
Further, the minutes on Federal Reserve's March two-day policy
meeting indicated that the Fed officials shared diverse views
regarding rate hike chances which also raised concerns over rate
According to the Fed's Beige Book, economic activity improved in
most districts of the U.S. Encouraging economic news including,
rise in ISM Services Index, Consumer Price Index (CPI) and Core CPI
and decline in initial claims boosted benchmarks for the month.
However, decline in new orders, retail sales, building permits and
Producer Price Index (PPI) dampened investor sentiment.
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