Stocks waver as investors await company earnings reports
Stocks ended Monday’s session mostly unchanged as investors waited for first-quarter company earnings to start rolling in. Overseas markets gained as investors hoped for more stimulus in China, the world’s second-largest economy.
The Dow Jones industrial average slipped 20.55 points, or 0.1%, to 17,556.41. The Standard & Poor’s 500 index fell 5.61 points, or 0.3%, to 2,041.99 and the Nasdaq composite fell 17.29 points, or 0.4%, to 4,833.40.
First-quarter earnings reports got underway with results from aluminum mining giant Alcoa after the closing bell Monday. The company reported adjusted earnings of 7 cents a share, beating the loss of two cents per share that analysts had expected.
Later this week, earnings results will start coming from the nation’s largest banks, including JPMorgan Chase, Citigroup and Wells Fargo. Expectations are low for this earnings season. Analysts surveyed by FactSet expect a decline of 9.1% in earnings compared with a year earlier.
The decline in earnings is largely tied to the steep drop in the price of oil, which has hammered energy companies’ stock prices as well as their profits. Energy companies are expected to report a loss this quarter. If energy were excluded from the S&P 500, earnings in the index would be down only 4.2% from a year earlier.
Some investors have said they are looking to set aside first-quarter earnings results. Because many believe the price of oil has found a bottom, there is hope that earnings later this year will make up for the dismal performance expected for the first quarter.
“There are signs we could see positive U.S. earnings surprises later this year, driven by a stabilization in oil prices and a halt in the U.S. dollar’s rise,” Richard Turnill, global chief investment strategist for BlackRock, wrote in a note to investors.
Overseas, investors were encouraged by economic data out of China, which showed inflation remains tame within the world’s second-largest economy. Low inflation could provide a reason for Chinese officials to offer more monetary stimulus to keep the country’s economy from slowing further. Asian and European markets closed mostly higher.
Benchmark U.S. crude oil rose 64 cents to $40.36 a barrel. Brent crude, the international benchmark, rose 89 cents to $42.83 a barrel.
In other individual companies, Hertz Global Holdings dived 11% to $8.59 after the rental car company cut its full-year earnings forecast. The company said the car rental industry is suffering from too much capacity and competition.
Yahoo rose 1% to $36.48 after Britain’s Daily Mail confirmed it was interested in making a bid to buy the beleaguered Internet company.
Canadian Pacific Railway rose 2.6% to $179.91 after the railroad gave up on its effort to buy competitor Norfolk Southern, which has repeatedly rejected its offers. Norfolk Southern fell 2.7% to $79.28.
Under Armour slumped 5.5% to $41.15 after an analyst for Morgan Stanley said he thinks the athletic apparel maker’s U.S. sales growth is slowing down.
U.S. government bond prices were mostly unchanged. The yield on the 10-year Treasury note remained steady at 1.72%. The dollar edged lower 107.95 yen from 108.10 yen. The euro was slightly higher at $1.1409.
In other energy commodities, heating oil rose 1 cent to $1.215 a gallon, wholesale gasoline rose 4 cents to $1.508 a gallon and natural gas fell 8 cents to $1.912 per 1,000 cubic feet.
Precious and industrial metals prices closed higher. Gold climbed $14.20 to $1,258 an ounce, silver jumped 59 cents to $15.98 an ounce and copper edged up less than a penny to $2.09 a pound.
