News Column

Stocks May Regain Ground Following Yesterday's Sell-Off - US Commentary

July 18, 2014

WASHINGTON (Alliance News) - After moving sharply lower over the course of the previous session, stocks may regain some ground in early trading on Friday. The major index futures are currently pointing to a modestly higher open for the markets, with the Dow futures up by 9 points.

Bargain hunting may contribute to early strength on Wall Street following the sell-off seen on Thursday, which pulled the Nasdaq and the S&P 500 down to their lowest closing levels in almost a month.

Traders may also react positively to quarterly results from General Electric (GE), which reported better than expected second quarter earnings.

Honeywell (HON) also reported better than expected second quarter results, while Google (GOOG) reported second quarter earnings that trailed estimates.

Meanwhile, geopolitical worries may continue to weigh on the markets after contributing to the substantial weakness seen in the previous session.

Traders continue to keep an eye on developments in Ukraine amid reports that a passenger plane was shot down near the Russian border. Both the Ukrainian government and separatist rebels in the region have denied responsibility.

The plan crash came a day after the US imposed new sanctions against Russia for allegedly attempting to destabilize Ukraine.

The situation in Israel also continues to raise concerns after Prime Minister Benjamin Netanyahu ordered a ground offensive in Gaza.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Geopolitical influences on markets are usually fleeting and the news yesterday will likely be too, but the intensification of the conflict and increased amount of sanctions will further damage the Russian economy, which was already on its heels."

"That said, of all the global concerns out there, I remain of the belief that the Federal Reserve is the biggest risk to asset prices than anything geopolitical," he added.

Not long after the open, trading could be impacted by a report from Thomson Reuters and the University of Michigan on consumer sentiment in the month of July.

The preliminary reading on the consumer sentiment index is expected to come in at 83.0 in July compared to the final June reading of 82.5.

The Conference Board is also scheduled to release its report on leading economic indicators in the month of June. The leading economic index is expected to climb by 0.5%.

With geopolitical concerns generating considerable selling pressure, stocks moved sharply lower over the course of the trading day on Thursday. The losses on the day more than offset Wednesday's gains, with the Dow pulling back well off its record closing high.

The major averages closed firmly in negative territory but off their lows for the session. The Dow dove 161.39 points or 0.9% to 16,976.81, the Nasdaq plunged 62.52 points or 1.4% to 4,363.45 and the S&P 500 tumbled 23.45 points or 1.2% to 1,958.12.

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Source: Alliance News

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