US close: Markets finish mixed as traders prepare for earnings season
Wall Street trading finished in a mixed state on Monday, as some jitters crept in ahead of the start of first-quarter earnings season later in the week.
Dow Jones I.A.
37,753.31
04:30 15/10/20
Nasdaq 100
17,394.31
11:45 18/04/24
The Dow Jones Industrial Average ended the session down 0.32% at 26,341.02, while the S&P 500 added 0.1% to close at 2,895.77 and the Nasdaq 100 was ahead 0.28% at 7,599.74.
At the open earlier, the Dow lost by 140 points as investor focus shifted towards upcoming earnings announcements.
Signs of progress in Sino-US trade relations had taken a back seat, as Larry Kudlow said the two sides were getting closer to a deal and that top tier officials will meet for talks again this week.
“The Dow may have closed at close to six-month highs on Friday night, but with a potentially disappointing first quarter earnings season kicking off mid-week, the air of confidence does seem to be running a little thin, said James Hughes, chief market analyst at Axitrader.
“That sits at odds with Friday’s economic data, where the slightly better than expected non-farm payrolls print gave little cause for concern whilst lacklustre wage growth added to the idea that the Federal Reserve may yet be pushed into a more dovish position over interest rate policy, which in turn should be good for stocks.”
Morgan Stanley strategists said that while they underestimated the impact of the Federal Reserve's pivot on equity prices, they saw the earnings recession as "just the beginning".
They warned that the year’s first quarter could be the first sign of negative year-on-year growth in three years.
“With US stocks fully valued and the Fed maximum dovish at this point, we think there will need to be some evidence of a real turn in earnings growth for US stocks to advance much further,” the Morgan Stanley strategists said.
“First quarter earnings season offers a gut check for a market looking for some evidence that the worst is truly behind us.”
They added that they suspected the year's big rally in stocks had a “positive impact” on corporate confidence, which could encourage firms to maintain full-year guidance, embedding a big second-half recovery in earnings growth.
“The question is whether the market will like that or instead prefer a lowered bar that is more achievable.
“We think it's a tough call but lean toward the latter.”
In oil markets, Brent crude hit its highest level of the year during the session, breaching the $70 a barrel mark as tensions in Libya escalated, increasing the risk of supply disruptions.
“The turmoil in the oil-rich North African country is adding to the already tightening oil market where supplies are curtailed because of OPEC production cuts and US sanctions on Iran and Venezuela," said City Index analyst Fiona Cincotta.
On the macroeconomic front, US factory goods orders slid 0.5% in February, as expected by economists, after being unchanged in January.
Demand for transportation equipment declined the most, falling 4.5% compared the 0.4% decline recorded in January.
That was followed by machinery, which was down 0.6% versus 2.1% growth a month earlier, and computers and electronic products, which narrowed its decline to 0.5% from 1.9%.
Orders for nondefense capital goods excluding aircraft, seen as a measure of business spending plans on equipment, edged down 0.1% after a 0.9% increase in January.
However, year-on-year, factory orders rose 2.4% in February.
In corporate news, Boeing shares descended 4.44% after the company said on Friday that it would cut its production of the troubled 737 MAX 8 aircraft.