Stock Market News For Apr 19, 2018

U.S. stocks closed mixed on Wednesday after gaining over two consecutive winning sessions. However, movements of indexes were modest in either direction. The Dow’s decline was driven by a plunge in the share price of IBM. However, the S&P 500 and Nasdaq finished in the green. Meanwhile, energy stocks gained after a 2.9% surge in oil prices and transportation sector starts off a strong earnings session. Following these, the broader market gained modestly.

The Dow Jones Industrial Average (DJI) closed at 24,748.07, declining 0.16%. The S&P 500 Index (INX) increased 0.08% to close at 2,708.64. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,295.24, increasing 0.19%. A total of 6.46 billion shares were traded on Wednesday, lower than the last 20-session average of 7 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.26 -to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.09 to -1 ratio. The CBOE VIX increased 2.3% and closed at 15.60, its first gain after closing lower in six consecutive days.

How Did the Benchmarks Perform?

The Dow decreased 0.2% with 14 stocks of the 30-stock index closing in the green while 16 stocks traded in the red.

The S&P 500 increased 0.1% led by 1.6% gain of the Energy Select Sector SPDR (XLE) and a 1% gain of Industrials Select Sector SPDR (XLI). Five out of 11 sectors of the benchmark index ended in positive territory with two of them gaining more than 1%. The index recorded 39 new 52-week highs and 2 new 52-week lows.

The tech-laden Nasdaq Composite also gained 0.2% driven by strong first-quarter earnings. The index recorded 131 new 52-week highs and 36 new 52-week lows.

Oil Prices Surge on Drop in Inventories

The U.S. Energy Information Administration (EIA) reported that the U.S. commercial crude oil inventories decline 1.1 million barrels to 427.6 million for the week ended Apr 13. WTI and Brent crude gained 2.9% and 2.7% to $68.47 per barrel and $73.48 a barrel, its best settlement since Nov 26, 2014, respectively.

Crude prices increased to their highest settlement since late 2014. Increase in oil prices led the Energy Select Sector SPDR (XLE) to gain 1.6%. Dow components, Chevron Corporation CVX and Exxon Mobil Corporation XOM increased 1.9% and 1.1%, respectively.

Earnings Momentum Continues

First quarter earnings results continue to show strong momentum.

Dow’s decline primarily due to tech giant International Business Machine Corp.’s IBM first-quarter earnings and revenues not only beat their respective Zacks Consensus Estimate but also rose year-over-year  (Read More: IBM Beats on Q1 Earnings & Revenues, Reiterates '18 Outlook).

However, this impressive result was mainly due to a one-time tax gain of $817 million in the quarter as management reiterated its profit forecast for 2018. The investors were looking for greater profit as management is diversifying toward a cloud/artificial-intelligence company. Moreover, the company also stated that its mainframe sales momentum may not continue in rest of the year. Consequently, share price plunged 7.5%, its highest in 5 years.

Meanwhile, the broader market gained due to other impressive earnings results. Share price of Morgan Stanley MS rose 0.4% after its first-quarter earnings and revenues not only beat their respective Zacks Consensus Estimate but also rose year-over-year  (Read More: Morgan Stanley Q1 Earnings Beat on Trading Rebound).

Major railroad operator CSX Corp.’s CSX shares rose 7.9% after its first-quarter earnings and revenues beat their respective Zacks Consensus Estimate and increased year-over-year  (Read More: CSX Q1 Earnings Surpass Estimates on Lower Costs, Rise Y/Y).

Likewise, leading air carrier United Continental Holdings Inc.’s UAL shares rose 4.8% after its first-quarter earnings and revenues outpaced respective Zacks Consensus Estimate and advanced year-over-year  (Read More: United Continental Q1 Earnings Beat, FY18 View Bullish).

Economic Data

The Federal Reserve stated in the latest Beige Book report that the U.S. economy will continue to grow supported by robust business borrowing, rising consumer spending, and tight labor markets. However, the central bank expressed concern about trade tariffs resulting in a hike in steel price. The United States - China trade conflict also a cause of concern. 

Stock That Made Headline

Kinder Morgan Q1 Earnings Beat Estimates, Revenues Lag

Kinder Morgan Inc. KMI reported mixed results in first-quarter 2018. The bottom line beat the Zacks Consensus Estimate while the top line missed the same. (Read More)

Canadian Pacific's Earnings and Revenues Miss in Q1

Canadian Pacific Railway Limited CP reported lower-than-expected earnings and revenues in first-quarter 2018. Results were hurt by rough weather conditions. (Read More)

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United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
CSX Corporation (CSX) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
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