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) gained almost 0.1% to close at 18,224.57. The Standard & Poor 500 (S&P 500) declined 0.1% to 2,113.86. The tech-laden Nasdaq Composite Index closed at 4,967.14; lost a meager 0.02%. The fear-gauge CBOE Volatility Index (VIX) rose 1.1% to settle at 13.84. A total of about 6.2 billion shares were traded on Wednesday, below month-to-date average of 6.8 billion. Advancers outpaced declining stocks on the NYSE. For 53% stocks that advanced, 44% declined.
On Wednesday, Federal Reserve chairwoman Janet Yellen provided a near similar testimony before the House Financial Services Committee like the one she delivered before the Senate Banking Committee. Over the last two days, Yellen has said that the Fed will remain "patient" before raising the interest rate and will decide on the same "on a meeting-by-meeting basis." She added that the Fed will consider a rate hike when it feels "reasonably confident that inflation will move back over the medium term toward our 2 percent objective." Additionally, Yellen stated that dropping the word "patient" from the Federal Open Market Committee’s (FOMC) statements does not imply that the Fed will raise interest rate immediately.
She also stated the economy is growing at a steady pace with a rapid decline in unemployment rate and impressive recovery in labor market. Yellen also mentioned that the economy has witnessed a monthly average of 280,000 jobs additions in 2015. However, she also said that some areas of the economy still remain weak. This includes slow growth in housing sector and sluggish wage growth. She added that slump in oil prices is one of the main reasons behind low inflation rate.
Separately, shares of Apple Inc. (AAPL) declined 2.6% following news that the tech giant was ordered by a federal jury to pay $532.9 million in damages to Smartflash LLC, a digital technology company whose only business comes from licensing 7 patents. During the trial, the company stated that Apple’s iTunes software infringed on 3 patent innovations.
Additionally, shares of Hewlett-Packard Company (HPQ) plunged 9.9% after posting first quarter fiscal 2015 revenues of $26.8 billion which decreased 4.7% year over year and lagged the Zacks Consensus Estimate of $27.4 billion. According to H-P, fiscal 2015 earnings per share are likely to range within $3.53-3.73, down from its previously guided range of $3.83-$4.03. The Zacks Consensus Estimate is pegged at $3.95. It was the worst performer among the S&P 500 companies on Wednesday.
Dismal performances of Apple and H-P had a negative impact on technology shares which in turn weighed on the Nasdaq. Key stocks from the sector including Intel Corporation (INTC), SanDisk Corp. (SNDK), Micron Technology, Inc. (MU) and Cisco Systems, Inc. (CSCO) lost 1.4%, 1.2%, 0.9% and 0.5%, respectively.
On earnings front, The TJX Companies, Inc.’s (TJX) shares gained 3.3% after announcing fourth quarter earnings of 93 cents per share, beating the Zacks Consensus Estimate of 90 cents. Net sales increased 6% year over year to $8.3 billion backed by higher comps. Moreover, shares of Dollar Tree, Inc. (DLTR) rose 2.2% after declaring fourth quarter adjusted earnings of $1.16 per share, a cent higher than the Zacks Consensus Estimate. Consolidated net sales surged 10.8% on a year-over-year basis in the quarter to $2,475.6 million, also beating the Zacks Consensus Estimate of $2,469 million.
These stronger-than-expected earnings results boosted the Consumer Discretionary Select Sector SPDR (XLY) by 0.8%. The sector was the biggest gainer among the S&P 500 sectors yesterday. Key stocks from the sector including Macy's, Inc. (M), Amazon.com Inc. (AMZN), McDonald's Corp. (MCD) and The Priceline Group Inc. (PCLN) rose 2.4%, 1.8%, 3.9% and 2.6%, respectively.
Moreover, oil prices registered strong gains yesterday following comments from Ali al-Naimi, Saudi Arabia’s oil minister. Al-Naimi said oil demand is rising and oil market seems to be “calm now.” The prices of WTI crude oil and Brent crude oil gained 3.4% and 4.8% to $50.99 per barrel and $61.63 a barrel, respectively. Increase in oil prices helped the Energy Select Sector SPDR (XLE) to rise nearly 0.6%. Key stocks from the sector including Cabot Oil & Gas Corporation (COG), EOG Resources, Inc. (EOG), Halliburton Company (HAL) and Baker Hughes Incorporated (BHI) gained 5.3%, 1.6%, 1.3% and 1%, respectively.
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