US open: Stocks drop again amid dollar weakness

By Sharecast News

Sharecast News | 18 Jul, 2017

21:27 26/04/24

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Stocks are putting in a mixed performance with analysts reacting poorly to the latest quarterly numbers out of Wall Street heavyweights Goldman Sachs and Bank of America.

At 1614 BST the Dow Jones Industrial Average was lower by 0.51% or 109.89 points to 2,519, with the S&P 500 drifting lower by 0.18% or 4.38 points to 2,454.70.

Another large drop in the US dollar on the back of news about a fresh setback in Republicans' plans to repeal and replace Obamacare was also weighing sentiment, alongside a weaker-than-expected reading on house building activity.

From a sector standpoint, the weakest areas of the market were: Heavy construction (-2.14%), Tires (-1.77%) and Iron & Steel (-1.40%).

David Madden, market analyst at CMC Markets UK, said: "US equity markets turned lower after today after Bank of America and Goldman Sachs reported their second-quarter numbers. The earnings updates combined with the failure of Donald Trump to get his healthcare reforms passed gave investors the perfect excuse to cash in their positions after a very positive run recently."

Acting as a bakcdrop, overnight the Wall Street Journal two more US senators had decided to change sides, derailing efforts to repeal and replace ex-president Obama's landmark Affordable Care Act.

For many observers, that was a necessary precursor to any fiscal stimulus.

That saw the US dollar spot index retreat 0.60% to 94.56, to its lowest mark in almost a year.

Import prices in the US dipped 0.2% month-on-month in June, according to the Bureau of Labor Statistics, as expected by economists.

The NAHB's homebuilder activity index for July dropped from a downwardly-revised reading of 66.0 to 64.0 - its worst print since November.

"The previous strength in the survey points clearly to rising new home sales over the summer, but the outlook for the fall is now rather less positive," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in reaction to the data.

A surge in Netflix's share price was acting as a partial offset, putting the Nasdaq Composite on course for its longest winning streak in over two years.

Shares in the Los Gatos, California-based tech giant were surging 11% - and at a fresh record high - after reporting sharp growth in the number of overseas subscribers for its streaming video service over the three months to 30 June.

Shares in consumer goods giant Johnson&Johnson were up by 0.5% after the consumer goods giant raised both its top and bottom-line outlook.

Bank of America was unloved despite posting stronger-than-expected second quarter earnings per share and sales, with analysts at UBS noting how the lender's net interest margings in fact fell over the latest three-month stretch.

Stock in Goldman Sachs was also trading on the backfoot despite blowing past analysts' EPS forecasts with profits of $3.95 (consensus: $3.36). Some 'market chatter' attributed the drop in its share price to the fact that it failed to hit even the Street's reduced estimates for trading revenues.

Dow Jones - Risers

Johnson & Johnson (JNJ) $133.42 0.96%
Procter & Gamble Co. (PG) $88.36 0.93%
Visa Inc. (V) $97.59 0.78%
Walt Disney Co. (DIS) $105.08 0.28%
Verizon Communications Inc. (VZ) $43.72 0.13%
Intel Corp. (INTC) $34.51 0.12%
Coca-Cola Co. (KO) $44.76 0.07%
Wal-Mart Stores Inc. (WMT) $76.38 0.01%
Nike Inc. (NKE) $57.79 -0.00%
General Electric Co. (GE) $26.81 -0.06%