News Column

Stocks May See Early Strength On Citigroup Earnings - US Commentary

July 14, 2014



WASHINGTON (Alliance News) - Stocks are likely to move to the upside in early trading on Monday, regaining some ground after coming under pressure last week. The major index futures are currently pointing to a notably higher open for the markets, with the Dow futures up by 76 points.

Early buying interest may be generated by a positive reaction to earnings news from Citigroup (C), with the financial giant jumping by 3.9% in pre-market trading.

Citigroup reported second quarter net income that fell sharply year-over-year due largely to a USD3.8 billion charge in connection with a settlement with the Justice Department related to the bank's sale of shoddy mortgage-backed securities.

However, the company reported adjusted earnings of USD1.24 per share on revenues of USD19.3 billion compared to analyst estimates for earnings of USD1.05 a share on USD18.9 billion in sales.

The markets may also benefit from news on the merger-and-acquisition front, with URS Corp. (URS) moving sharply higher after agreeing to be acquired by Aecom (ACM) for approximately USD4 billion in cash and stock.

Nonetheless, trading activity may be somewhat subdued as traders look ahead to a slew of earnings news and economic data later in the week.

Goldman Sachs (GS), JP Morgan (JPM), Intel (INTC), Bank of America (BAC), IBM (IBM), Morgan Stanley (MS), and General Electric (GE) are among the big-name companies due to report their quarterly results in the coming days.

Traders are also likely to keep a close eye on reports on retail sales, producer price inflation, industrial production, housing starts, and regional manufacturing activity.

Congressional testimony by Federal Reserve Chair Janet Yellen may also attract attention, although Peter Boockvar, managing director at the Lindsey Group, noted, "We can probably write her speech for her based on everything we've heard over the past few months."

"The issue for the Fed in coming months is if the economic data, aka labor market and inflation numbers, continue to deviate from the Fed's forecast because as of right now the Fed's 2015 year end targets will be met in coming months," Boockvar said.

After showing a lack of direction throughout much of the trading session on Friday, stocks managed to end the day mostly higher. With the upward move, the markets extended the recovery from the sell-off seen in early trading on Thursday.

The major averages closed modestly higher, near their best levels of the day. The Dow rose 28.74 points or 0.2% to 16,943.81, the Nasdaq climbed 19.29 points or 0.4% to 4,415.49 and the S&P 500 edged up 2.89 points or 0.2% to 1,967.57.

Despite the gains on the day, the major averages all moved lower for the week. The Nasdaq tumbled by 1.6%, while the Dow and the S&P 500 dropped by 0.7% and 0.9%, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan'sNikkei 225 Index advanced by 0.9%, while Hong Kong'sHang Seng Index rose by 0.5%.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has risen by 0.6%, the UK'sFTSE 100 Index and the German DAX Index are up by 0.8% and 0.9%, respectively.

In overseas trading, crude oil futures are slipping USD0.17 to USD100.66 a barrel after plunging USD3.23 or 3.1% to USD100.83 a barrel in the week ended July 11th. Gold futures, which climbed USD16.80 or 1.3% to USD1,337.40 an ounce in last week, are tumbling USD23.10 to USD1,314.30 an ounce.

On the currency front, the dollar lost some ground last week, with the greenback sliding 0.8% against the yen before ending the week at 101.30 yen. The dollar also dipped 0.1% versus the euro to USD1.3608. The dollar is currently trading at 101.52 yen and is valued at USD1.3627 versus the euro.



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Source: Alliance News


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