Benchmarks finished in the red on Friday, as investors remained concerned on the outcome of the Presidential election in France. Donald Trump’s encouraging comments on proposed tax reforms lifted investor sentiment, which helped to trim losses in the broader market. Meanwhile, existing-home sales in March increased to hit its highest pace in almost ten years.
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 0.2% to close at 20,547.76. The S&P 500 fell 0.3% to close at 2,348.69. The tech-laden Nasdaq Composite Index declined 0.1% to close at 5,910.52. The fear-gauge CBOE Volatility Index (VIX) gained 3.4% to 14.63. A total of around 3.5 billion shares were traded in NYSE on Friday. Decliners outpaced advancing stocks on the NYSE. For 52% stocks that declined, 44% advanced.
French Presidential Election
Investors kept a close watch on the first-round of the presidential election in France scheduled to be held on Apr 23 with polls confirming a close contest between four candidates. The recent surge in popularity experienced by euroskeptic Jean-Luc Melenchon, has unnerved investors with many expressing concern over a possible “Frexit”. Frexit is expected to spark turmoil as France is considered to be an integral part of both the Eurozone and the European Union. Far-right candidate Marine Le Pen who is also a euro skeptic, is one of the major contenders for one of the two spots in the runoff. Centrist Emmanuel Macron also stands a good chance of entering into a second-round battle versus Le Pen or Melenchon.
Meanwhile, the recent suspected terror attack in Paris on Thursday is expected to boost support for anti-immigration candidate Marine Le Pen.
General Electric and Mattel Drag Down Benchmarks
General Electric GE released its first quarter 2017 financial results on Friday. Though the industrial goods major beat both sales and earnings estimates, the company posted first quarter cash flow of negative $1.6 billion from industrial operations compared with a negative $600 million it expected. The negative cash flow was attributable to higher working capital and the timing of bills to customers. Disappointing cash flow report from General Electric had an adverse impact on the S&P 500. Shares of General Electric declined by more than 2% following the earnings release.
Shares of Mattel Inc MAT fell 13.6% following the release of first quarter 2017 financial results on late Thursday. The company reported adjusted loss per share of $0.32 was much wider than the Zacks Consensus Estimate of a loss of $0.17. Also, the loss was wider than the prior-year quarter loss of 14 cents, due to lower sales. Mattel possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Furthermore, revenues of $735.6 million plunged 15% year over year as reported and in constant currency. The decline was due to the prolonged impact from the retail inventory overhang coming out of the holiday season and the resulting slower pace of reorders by retailers. The weak financial results from the company had an adverse impact on the Investor confidence which ultimately dragged down the Nasdaq.
Trump’s Comments on Tax Reform
Speaking to the Associated Press on Friday, President Donald Trump commented that his administration would unveil a massive tax cut this week in an attempt to relieve individuals and businesses from tax and regulatory burdens. Though Trump has not provided details about the tax package, his encouraging comments lifted investor confidence which ultimately helped stocks to pare some losses.
As per the National Association of Realtors, existing-home sales rose 4.4% in March to a seasonally adjusted annual rate of 5.71 million, outpacing the consensus estimate of 5.58 million. This is the highest pace experienced by existing home sales since February 2007.
For the week, the Nasdaq, S&P 500 and Dow advanced 1.8%, 0.9% and 0.5% respectively. During the week, benchmarks gained following the release of strong earnings reports and Treasury Secretary Steven Mnuchin’s comments on Trump’s proposed tax reform plans. However, retail sales fell in March for two consecutive months, posting their worst two-month stretch in two years due to weak demand in automobile sector. Meanwhile, continuing jobless claims dropped 49,000 to 1.98 million, indicating the strongest U.S. labor market in recent years.
Stocks that made Headlines
Chevron Loses $260M Appeal Against Australian Tax Office
The Australian subsidiary of multinational energy giant Chevron Corporation CVX recently lost an appeal against the Australian Tax Office contesting a tax bill of $260 million. (Read More)
C.R. Bard Beats Q1 Earnings & Revenues, FY17 View Up
Murray Hill, NJ-based C.R. Bard Inc. BCR reported adjusted earnings of $2.87 in the first quarter of 2017, exceeding the Zacks Consensus Estimate of $2.65. (Read More)
More Stock News: 8 Companies Verge on Apple-Like Run
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General Electric Company (GE): Free Stock Analysis Report
C.R. Bard, Inc. (BCR): Free Stock Analysis Report
Chevron Corporation (CVX): Free Stock Analysis Report
Mattel, Inc. (MAT): Free Stock Analysis Report
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