Benchmarks finished in the green on Tuesday following the release of strong earnings reports. The Nasdaq finished at a record high, bolstered by Apple’s strong price gains. Meanwhile. investors remained cautious about the outcome of Fed’s two-day policy meeting which began on Tuesday. Additionally, energy shares declined due to fall in oil prices and investors digested weak auto sales data for April.
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) advanced 0.2% to close at 20,949.89. The S&P 500 rose 0.1% to close at 2,391.17. The tech-laden Nasdaq Composite Index gained 0.1% to a record close of 6,095.37. The fear-gauge CBOE Volatility Index (VIX) gained 4.9% to 10.60. A total of around 7 billion shares were traded on Tuesday, higher than the last 20-session average of 6.5 billion shares. Advancers were roughly equivalent to declining stocks on the NYSE.
Nasdaq Boosted By Gains In Apple
The tech-laden Nasdaq finished at a record high for the second successive session after reaching to an intraday high of 6,102.72. The upside was driven by impressive stock market performance by tech-giant Apple AAPL and strong earnings results from other companies.
Apple is scheduled to report earnings after the market’s close on Tuesday, where analysts expect revenues of more than $7 billion in services. The stock has been a solid performer since the last earnings report and is currently up 24% in the year-to-date period, outperforming the Zacks Tech sector (up 11.2%) and the S&P 500 index (up 6.8%).
The stock showed impressive momentum in its services business that management guided towards doubling over the next four years. The company is expected to report $2.01 per share on $52.6 billion in revenues, up 5.9% and 4.1% from the year-earlier levels, respectively.
Strong Earnings Results
Merck & Co., Inc. MRK reported first quarter 2017 results with both earnings and revenues beating the Zacks Consensus Estimate. Shares of the company advanced 0.5% following release of better than expected earnings results.
Shares of Coach Inc COH gained 11.4% and emerged as biggest advancer on the S&P 500, after the company posted better-than-expected third-quarter fiscal 2017 bottom-line results. Adjusted earnings of $0.46 per share beat the Zacks Consensus Estimate by a couple of cents.
Aetna Inc AET reported earnings of $2.71 per share, surpassing the Zacks Consensus Estimate of $2.36. Total revenue of $15.2 billion missed the Zacks Consensus Estimate of $15.47 billion. Shares of the company advanced 1.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Positive earnings results from Merck & Co, Coach and Aetna lifted investors’ confidence which ultimately had a positive impact on the broader market.
The Q1 growth pace has been steadily improving in recent days as companies, particularly banks, have been coming out with better than expected year-over-year growth.
As of Friday, April 28th, we have Q1 results from 288 S&P 500 members that combined account for 63.8% of the index’s total market capitalization. Total earnings for these companies are up +13.7% from the same period last year on +8.2% higher revenues, with 76.4% beating EPS estimates and 68.1% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 55.2%. (Read More)
Auto Sales Dip
U.S. auto industry reported disappointing sales in April for the second straight month, with sales hitting 16.88 million, below an expected annual rate of 17.2 million. Major automakers including General Motors GM, Ford Motor F reported decline in new vehicle sales of 5.8% and 7.2% respectively. As per joint analysis by JD Power and LMC Automotive, total incentive spending increased 13% to date this year to $3,814 per new vehicle. A large part of the downward slide at most companies was attributable to consumer sales at car lots.
Oil Prices Dropped
Oil prices declined on Tuesday, pressured by lower than expected output-cuts from members of OPEC and growing output in the U.S., Canada and Libya. Drop in oil prices dragged down energy shares, which ultimately had an adverse impact on the broader market. WTI crude prices fell by $1.18, or 2.5%, to $47.66 a barrel.
Central Bank’s Two-Day Policy Meeting
Meanwhile, investors remained focused on the outcome of Fed’s two-day policy meeting, scheduled to be ended on Wednesday. Investors kept a close watch on central bank’s plans to unwind its $4.5 trillion balance sheet and its decision about a rate hike.
Stocks that made Headlines
Big 5 Sporting Tops Q1 Earnings & Sales, Stock Up
Shares of Big 5 Sporting Goods Corp. BGFV jumped 12.3% in after-hours trading session, as the company posted solid first-quarter 2017 results, wherein both sales and earnings topped estimates and improved year over year. (Read More)
Apple Q2 Earnings and Revenues Beat, Increase Y/Y
Apple Inc. reported second-quarter fiscal 2017 earnings of $2.10 per share and revenues of $52.9 billion, easily beating the Zacks Consensus Estimate of $2.02 and $52.6 billion, respectively. (Read More)
Western Union Misses on Q1 Earnings, Reaffirms Guidance
The Western Union Company WU reported first-quarter 2017 operating earnings per share of 35 cents, which missed the Zacks Consensus Estimate by 12.5%. (Read More)
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Merck & Company, Inc. (MRK): Free Stock Analysis Report
Ford Motor Company (F): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Aetna Inc. (AET): Free Stock Analysis Report
Big 5 Sporting Goods Corporation (BGFV): Free Stock Analysis Report
Coach, Inc. (COH): Free Stock Analysis Report
Western Union Company (The) (WU): Free Stock Analysis Report
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