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Benchmarks closed mostly in the red on Wednesday, dragged down primarily by energy shares after oil prices declined to a two-week low on Wednesday. Meanwhile, International Business Machines Corporation came out with weaker than expected first quarter results, which ultimately dragged down the Dow.
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) declined 0.6% to close at 20,404.49. The S&P 500 fell 0.2% to close at 2,338.17. The tech-laden Nasdaq Composite Index closed at 5,863.03, gaining 0.2%. The fear-gauge CBOE Volatility Index (VIX) gained 3.5% to 14.93. A total of around 3.5 billion shares were traded in NYSE on Wednesday. Decliners outpaced advancing stocks on the NYSE. For 51% stocks that declined, 44% advanced.
Oil Prices Hit 2-Week Low
The unanticipated increase in gasoline inventories along with rise in U.S. production had an adverse impact on oil prices. WTI crude prices fell by $1.97, or 3.9%, to $50.44 a barrel after the release of the Federal Reserve’s Beige Book. As per Phil Flynn, senior market analyst at Price Futures Group, there was “generally nothing in the Beige Book that would stop the Fed from raising rates in June, so the dollar rallied and added to oil’s expiration lows”.
As per the U.S. Energy Information Administration, (EIA) U.S. crude stocks dropped 1 million barrels for the week ending April 14, 2017. Additionally, as per EIA, U.S. production increased to 9.252 million barrels a day, the highest since August 2015. Gasoline stocks recorded a counter-seasonal build of 1.5 million barrels. Crude oil imports averaged over 7.9 million barrels per day over the last four weeks, 2% above the similar period last year.
The fall in oil prices had a negative impact on energy shares which emerged as the worst performing sector of S&P 500.The Energy Select Sector SPDR (XLE) declined 1.5%. Some of its key holding, including Halliburton Co HAL and Chevron Corporation CVX declined by 2.3% and 1.4% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
IBM Drags Down Dow
International Business Machines Corporation IBM released its first quarter 2017 financial results on Tuesday. The company recorded revenues of $18.16 billion, missing the Zacks Consensus Estimate of $18.49 billion and decreased 2.8% year over year and 16.6% sequentially. However, the company reported first-quarter non-GAAP earnings of $2.38 per share, which increased 1.3% from the year-ago quarter and beat the Zacks Consensus Estimate by $0.04.
Shares of IBM dropped 4.9%.This was the biggest one-day drop experienced since June, following which the stock reached to its weakest level since December.
Disappointing earnings report from IBM had an adverse impact on Dow. contributing to a 57 point loss.
Morgan Stanley Earnings Results
Meanwhile, shares of Morgan Stanley MS increased 2% after the company posted first-quarter 2017 earnings of $1 per share, outpacing Zacks Consensus Estimate of $0.9. Moreover, earnings surged 82%from the prior-year quarter. Net revenue amounted to $9.7 billion, a jump of 25% from the prior-year quarter. In addition, revenues surpassed the Zacks Consensus Estimate of $9.1 billion.
Additionally, as per Fed Beige Book, inflation pressures remained in check and each of the twelve Federal Reserve Districts experienced an increase in economic activity between mid-February and the end of March, with the pace of expansion equally split between modest and moderate.
Stocks that made Headlines
Qualcomm Inc. QCOM , the largest manufacturer of wireless chipsets based on baseband technology in the U.S., reported mixed financial results for the second quarter of fiscal 2017 (ended Mar 31, 2017) wherein the bottom line outshined the Zacks Consensus Estimate but the top line missed the same. ( Read More )
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