Dow holds 18K despite Microsoft’s worst day in a year – US oil closes up 1.3% ending week with more than 8%

22.04.2016 23:18
Evelyn Cheng |

U.S. stocks closed mixed Friday with tech stocks leading declines after major earnings in the sector disappointed.

Microsoft closed 7.17 percent lower, its worst day since Jan. 27, 2015. (Tweet This )

The Dow Jones industrial average and S&P 500 still posted their second-straight week of gains amid mixed earnings.

“Part of it may just be the market is taking a breather off the rally we had at the beginning of April because the moves lower are on low volume and it doesn’t feel panicky,” said Lance Humphrey, portfolio manager at USAA Asset Management.

The Dow closed higher with Travelers recovering from Thursday’s plunge to contribute the most to gains. Microsoft contributed the most to declines.

The Nasdaq composite underperformed, closing 0.8 percent lower after earlier falling 1 percent. Shares of Alphabet declined more than 5 percent, while Facebook lost 2.5 percent and Amazon.com closed 1.66 percent lower.

Information technology closed 1.9 percent lower, barely in positive territory for the year after briefly joining health care and financials in the red for 2016.

“The real story is tech. It’s a group that got out of itself in terms of expectations,” said Art Hogan, chief market strategist at Wunderlich Securities. “When you think about the recovery in general, the Dow and S&P are still in positive territory year-to-date. The Nasdaq never did.”

Energy was the top S&P sector on the day, rising 1.33 percent, and is the top S&P 500 performer year-to-date with gains of nearly 11.5 percent.

U.S. crude oil futures settled up 55 cents, or 1.27 percent, at $43.73 a barrel. The weekly oil rig count showed a decline of 8 to 343, down 360 rigs from the same period last year, according to Baker Hughes.

Microsoft posted earnings a touch below estimates, with revenue essentially in-line, as continued weakness in the personal computing market weighed. .

Google’s parent Alphabet reported earnings that missed on both the top and bottom line as the firm increased its investments in new projects.

McDonald’s reported earnings that beat on both the top and bottom line, and gave comparable same-store sales that topped expectations.

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Excluding restructuring costs, Caterpillar reported earnings of 67 cents a share, down from $2.07 a year ago. The company also trimmed its 2016 sales outlook range to the lower end of the previously forecast range, despite recent gains in commodity prices and signs of improvement in the China market.

Visa reported earnings above expectations on both the top and bottom line, but lowered guidance for annual net revenue growth.

Starbucks earnings matched estimates, while revenue was a touch lower. Global comparable same-store sales missed expectations.

“Big companies, iconic brands, but nonetheless a very mixed picture,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

“We had a pullback yesterday, no technical damage, nothing life-threatening, but what happens from here?” he said.

In economic news, the Markit flash U.S. manufacturing PMI fell to 50.8 in April from 51.5 in March.

Treasury yields held mostly higher, with the 2-year yield near 0.81 percent and the 10-year yield around 1.88 percent.

The U.S. dollar index traded about 0.6 percent higher, with the euro near $1.122 and the yen at 111.73 yen against the greenback as of 1:50 p.m. ET.

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U.S. stocks closed lower Thursday, with telecoms leading declines. The Dow closed below the psychologically key 18,000 level, while the S&P 500 ended at 2,091.

“Technically the markets are in a much more positive trend. We have broken the May downtrend. Internals have improved,” said Lance Roberts, chief investment strategist at Clarity Financial. But “this is a very short-term improvement.”

Symbol

Name

Price

 

Change

%Change

DJIA

Dow Jones Industrial Average

18003.75

 

21.23

0.12%

S&P 500

S&P 500 Index

2091.58

 

0.10

0%

NASDAQ

Nasdaq Composite Index

4906.23

 

-39.66

-0.80%

Overseas, European stocks closed lower, but held weekly gains of nearly 1.7 percent or more. The DAX outperformed with a 3.2 percent gain for the week.

Asian stocks closed mixed, with the Hang Seng falling about 0.7 percent. The Shanghai composite closed up about 0.2 percent but down more than 3.8 percent for the week, its worst since the one ended Jan. 29.

The Nikkei 225 closed up 1.2 percent on the day and up 4.3 percent for the week, its second-straight weekly gain. A late-afternoon Bloomberg report that the Bank of Japan may consider applying negative rates to its lending program for financial institutions helped stocks rise and weaken the yen against the U.S. dollar.

In midday trade, the Dow Jones industrial average declined 50 points, or 0.28 percent, to 17,932, with Coca-Cola and Travelers leading advancers and Microsoft and Visa the greatest laggards.

The S&P 500 declined 9 points, or 0.44 percent, to 2,082, with information technology leading five sectors lower and energy the top gainer.

The Nasdaq composite declined 68 points, or 1.4 percent, to 4,877.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher near 13.96.

About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 421 million and a composite volume of 1.87 billion in midday trade.

High-frequency trading accounted for 49 percent of April’s daily trading volume of about 6.99 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

U.S. crude oil futures for June delivery gained 62 cents to $43.80 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery declined $18.40 to $1,231.80 an ounce as of 12:53 p.m. ET.

CNBC’s Peter Schacknow contributed to this report.





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