U.S. benchmarks ended in negative territory as investors prepared themselves for Trump’s inauguration as the 45th President of the U.S. Also, ECB’s decision to keep key rates unchanged had a negative impact on markets. Investors also kept a close watch on fourth quarter earnings results. Separately, industrials emerged as the only gainers yesterday following strong gains in rail stocks. The Dow ended in the red for the fifth straight session, registering its lengthiest losing streak since last November.
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) declined 0.4%, to close at 19,732.40. The S&P 500 also decreased 0.4% to close at 2,263.69. The tech-laden Nasdaq Composite Index closed at 5,540.08, losing 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 2.4% to settle at 12.78. A total of around 6.3 billion shares were traded on Thursday, higher than the last 20-session average of 6.1 billion shares. Decliners outpaced advancing stocks on the NYSE. For 72% stocks that declined, 25% advanced.
Major Factors Behind Yesterday’s Losses
Cautious stance taken by investors ahead of the U.S. President inauguration day played a major role in dragging the major benchmarks into negative territory. Donald Trump will be sworn in as the 45th president of the U.S. today. Though markets registered healthy gains following Trump’s victory in the Presidential election, the rally has lost steam to some extent over the past few sessions on concerns over Trump’s policies.
Separately, European Central Bank’s (ECB) decision to keep its policies unchanged also had a negative impact on investor sentiment. The central bank opted to keep refinancing operations, deposit rate and marginal lending rate untouched. Moreover, it also left the volume of its QE program unchanged. ECB President, Mario Draghi said: “We have to be patient. As (the) recovery will firm up, real rates will go up. There are no signs yet of a convincing upward trend in underlying inflation.”
Separately, shares of The Bank of New York Mellon Corporation ( BK) declined 3% to emerge as the biggest decliner among S&P 500’s financials after reporting lower-than-expected fourth quarter earnings results.
Rail Stocks Surge, Netflix Impresses
Shares of CSX Corporation ( CSX) surged 23.4% on speculation that Paul Hilal, former partner of Pershing Square, and Canadian Pacific Railway Limited’s ( CP) outgoing CEO Hunter Harrison may jointly present an offer to revamp CSX’s management. CSX was the best performer among S&P 500 companies.
Union Pacific Corporation’s ( UNP) shares gained 2.4% after announcing better-than-expected fourth quarter earnings results. These stocks led Industrial Select Sector SPDR ETF (XLI) to emerge as only gainers among S&P 500 sectors. XLI rose 0.7% yesterday. While CSX holds a Zacks Rank #2 (Buy), Union Pacific possesses a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Moreover, shares of Netflix, Inc. ( NFLX) gained 3.9% after posting stronger-than-expected fourth quarter earnings results. Its fourth quarter earnings of 15 cents per share and revenues of $2.478 billion were well ahead of the Zacks Consensus Estimate of 13 cents and $2.468 billion, respectively. (Read: Netflix Reports Solid Q4 Earnings, Subscriber Growth )
Meanwhile, the U.S. Department of Labor reported that initial claims declined by 15,000 to hit a 40-year low level of 234,000 for the week ending Jan 14. This was also lower than the consensus estimate of 250,000. Moreover, Philadelphia Federal Reserve business conditions index increased from 19.7 in December to 23.6 this month. This also came in higher than the consensus estimate of 16.
Also, the U.S. Department of Commerce reported that housing starts jumped 11.3% to a seasonally adjusted annual rate of 1,226,000 last month, also higher than the consensus estimate of 1,195,000. However, building permits declined 0.2% to a seasonally adjusted annual rate of 1,210,000 in December, lower than 1,220,000.
Stocks That Made Headlines
GATX Corp's Q4 Earnings & Sales Top; Shares Gain
GATX Corporation (GATX ) reported better-than-expected earnings per share and revenues in the fourth quarter of 2016. ( Read More )
Check Point Stock Up on Q4 Earnings & Sales Beat
Shares of Check Point Software Technologies Ltd. ( CHKP) were up 7.5% yesterday following the company’s announcement of impressive fourth-quarter 2016 results. ( Read More )
Target Stock Down on Soft Holiday Sales, View Cut
Departmental store retailer, Target Corporation ( TGT) released soft sales results for the period Nov–Dec 2016, which mainly comprises the holiday season. ( Read More )
Canadian Pacific Down on Q4 Earnings & Revenue Miss
Railroad operator, Canadian Pacific Railway Limited ( CP) reported lower-than-expected earnings and revenues in the fourth quarter of 2016. ( Read More )
Rent-A-Center Issues Q4 Preliminary Results; Stock Down
Shares of the leading rent-to-own operator in the U.S., Rent-A-Center, Inc. (RCII) tanked nearly 12% during after-market trading hours yesterday, after the company issued dismal preliminary guidance for fourth-quarter 2016. ( Read More )
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CSX Corp. (CSX): Free Stock Analysis Report
Canadian Pacific Railway Ltd. (CP): Free Stock Analysis Report
Union Pacific Corp. (UNP): Free Stock Analysis Report
Netflix Inc. (NFLX): Free Stock Analysis Report
Gatx Corp. (GATX): Free Stock Analysis Report
Check Point Software Technologies Ltd. (CHKP): Free Stock Analysis Report
Target Corp. (TGT): Free Stock Analysis Report
Rent-A-Center Inc. (RCII): Free Stock Analysis Report
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