2015-01-21

Benchmarks ended Tuesday’s choppy trading session in the green led by gains from technology shares. Investors also remained focused on ECB’s meeting scheduled for Thursday. ECB is expected to unveil a bond-buying program in order to boost Eurozone’s economy. Investors also kept an eye on fourth-quarter earnings results of major companies including Halliburton, Baker Hughes, Johnson & Johnson, Morgan Stanley and Delta Air Lines. Meanwhile, oil prices dropped after IMF trimmed its global growth forecast for 2015 and 2016.

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 a meager 0.02% to close at 17,515.23. The Standard & Poor 500 (S&P 500) went up almost 0.2% to close at 2,022.55. The tech-laden Nasdaq Composite Index closed at 4,654.85; gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) dropped 5.1% to settle at 19.89. A total of about 7.2 billion shares were traded on Tuesday, almost in line with this month’s average of 7.29 billion. Decliners outpaced advancing stocks on the NYSE. For 60% stocks that declined, 38% advanced. Markets were closed on Monday due to the Martin Luther King Jr. Day holiday.

Benchmarks started the holiday-shortened week with marginal gains helped by a rally in technology shares. The Technology Select Sector SPDR ETF (XLK) gained 0.8%, the highest among the S&P 500 sectors. Key stocks from the sector such as Apple Inc. (AAPL - Analyst Report), Microsoft Corporation (MSFT - Analyst Report) and Facebook, Inc. (FB - Analyst Report) increased 2.6%, 0.3% and 1.4%, respectively. Telecom shares from the sector, Verizon Communications Inc. (VZ - Analyst Report) and AT&T, Inc. (T - Analyst Report) advanced 1.4%.

Separately, the Nasdaq was boosted by gains among bio-tech stocks. Shares of bio-tech companies such as Biogen Idec Inc. (BIIB - Analyst Report), Vertex Pharmaceuticals Incorporated (VRTX - Analyst Report), Celgene Corporation (CELG - Analyst Report) and Regeneron Pharmaceuticals, Inc. (REGN - Analyst Report) increased 2.9%, 1.5%, 1.2% and 3%, respectively. Overall, the iShares NASDAQ Biotechnology Index (ETF) gained 1.7%.

However, broader healthcare sector finished unchanged after Johnson & Johnson’s (JNJ - Analyst Report) fourth quarter sales figures fell short of expectations. The company’s fourth quarter sales of $18.3 billion were shy of the Zacks Consensus Estimate of $18.5 billion. On the other hand, the company’s fourth-quarter 2014 earnings of $1.27 per share was a couple of cents above the Zacks Consensus Estimate. Shares of Johnson & Johnson dropped 2.6%. The drop in its share price also weighed on the Dow.

Separately, shares of Delta Air Lines, Inc. (DAL - Analyst Report) soared 7.3% after the company reported fourth-quarter 2014 adjusted earnings of 78 cents per share, more than the Zacks Consensus Estimate of 75 cents. Drop in gas prices were cited to be the reason behind this positive result.

Meanwhile, oil prices continued to plunge on Tuesday. The West Texas Intermediate (WTI) crude oil price nosedived almost 5% to settle at $46.39 per barrel. Additionally, price of Brent crude oil also dropped 4.5% to settle at $47.99 per barrel. Oil prices dropped after the International Monetary Fund made the sharpest cut to its global growth forecast in three years. The IMF now sees global growth at 3.5% in 2015, down from the previous projection of 3.8%. The IMF also lowered its forecast for 2016 to 3.7% from its earlier projection of 4.1%.

However, the energy sector eked out gains and settled in positive territory. The Energy Select Sector SPDR (XLE) gained 0.1%. Shares of energy companies such as Halliburton Company (HAL - Analyst Report) and Baker Hughes Incorporated (BHI) advanced 1.8% and 1.2%, respectively, after both the companies reported upbeat quarterly results. Halliburton’s earnings per share came in at $1.19, beating the Zacks Consensus Estimate of $1.11. Baker Hughes reported fourth-quarter 2014 adjusted earnings of $1.44 a share which beat the Zacks Consensus Estimate of $1.08.

Financial shares ended in negative territory following discouraging quarterly results from Morgan Stanley (MS). The company’s fourth-quarter 2014 earnings of 40 cents per share missed the Zacks Consensus Estimate of 47 cents. Decline in trading revenues were cited to be the reason behind this dismal result. Shares of Morgan Stanley went down 0.4%. Overall, the Financial Select Sector SPDR (XLF) declined 0.4%.

On the economic front, the National Association of Home Builders/Wells Fargo said U.S. homebuilders’ confidence moved down in January. The sentiment gauge went down to 57 in January from December’s upwardly revised reading of 58. However, the index remained above the key level of 50.

The SPDR S&P Homebuilders ETF (XHB) declined 1.7%. The sector was the biggest decliner among the S&P 500 sectors. Key homebuilder stocks including PulteGroup, Inc. (PHM), DR Horton Inc. (DHI), Toll Brothers Inc. (TOL) and KB Home (KBH) decreased 3.6%, 3.4%, 2.2% and 4.9%, respectively.

Separately, shares of FXCM Inc. (FXCM) tanked 87.3% after it said it will receive a $300 million bailout package from Jefferies Group LLC owned by Leucadia National Corporation (LUK). The currency brokerage firm was hit hard due to the Swiss National Bank’s surprise decision to do away with its long-standing decision of fixing the exchange rate of the Swiss franc against euro.

Meanwhile, investors refrained from placing huge bets ahead of the European Central banks’ (ECB) meeting, scheduled on Thursday. ECB is expected to announce quantitative easing program in order to revive the Eurozone economy.

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