VOL. 43 | NO. 16 | Friday, April 19, 2019
US stocks cap holiday shortened week with modest gains
The Associated Press
The major U.S. stock indexes capped a holiday shortened week with slight gains Thursday, reversing some of the modest losses from a day earlier.
The marginal upward move was not enough to keep the benchmark S&P 500 index from snapping a string of three straight weekly gains.
Industrial sector stocks paved the way higher as traders welcomed solid earnings from Snap-on, Honeywell International, United Rentals and Union Pacific. Technology companies also notched solid gains, offsetting losses by financial and energy stocks.
Traders gave a strong reception to Pinterest and Zoom Video Communications, two technology companies that made their widely anticipated stock market debuts. Cigarette makers fell on news that the U.S. Senate's majority leader plans to introduce legislation to raise the minimum age to buy tobacco products from 18 to 21.
Investors remain focused on company earnings as they look for clues about the health of the U.S. economy and the prospects for better corporate profits, a key driver of stock market gains. Analysts expect the wave of first quarter results for S&P 500 companies being reported over the next few weeks will be the weakest in nearly three years.
"The big takeaway over the past week is the U.S. is doing OK and (company) outlooks are initially reasonable," said Ben Phillips, chief investment officer at EventShares.
The S&P 500 gained 4.58 points, or 0.2%, to 2,905.03.
The Dow Jones Industrial Average rose 110 points, or 0.4%, to 26,559.54. The Nasdaq composite inched 1.98 points higher, or less than 0.1%, to 7,998.06.
The Russell 2000 index of small-cap dropped 1.85 points, or 0.1%, to 1,565.75.
Major European stock indexes finished mostly higher.
Bond prices rose. The yield on the 10 year Treasury fell to 2.56% from 2.59% late Wednesday.
The U.S. stock indexes struggled to maintain momentum for much of the day before locking in slight gains by the end of the day.
The market has been charting an uneven course all week as traders wade through company earnings reports.
Even so, stocks are still holding on to blockbuster gains after rebounding from a steep sell-off late last year. The S&P 500 remains within 1% of its most recent all-time high on September 20.
The Federal Reserve helped spur the market's rebound early this year when it said that it may not raise interest rates at all in 2019.
Still, investors are looking at company earnings as they divine which direction the stocks will churn next.
"We haven't really gotten to the meat of earnings season and (investors) want to see some really positive guidance and they want to make sure earnings are growing," said Karyn Cavanaugh, senior markets strategist at Voya Investment Management. "We have a high bar to jump over from last year, because in the first quarter we had that one-time tax bump."
Several industrial sector stocks surged after reporting solid quarterly results Thursday.
Snap-On climbed 6.5% after the tool and diagnostic equipment maker's first quarter profit beat forecasts and it reported growth in its U.S. franchise network.
Union Pacific gained 4.4% after the railroad's first quarter profit climbed 6% even though the company hauled 2% fewer carloads and dealt with massive flooding. Union Pacific's earnings topped analysts' estimates, though its revenue declined, falling short of analysts' forecasts.
United Rentals surged 8.1% after the construction equipment rental company's first quarter results beat Wall Street's expectations.
Honeywell International picked up 3.8% after its first quarter earnings topped analysts' forecasts thanks to a strong sales growth in aerospace, building technologies and other lines of business. The company also raised its earnings guidance for the year.
Results from other companies left traders wanting.
Skechers USA tumbled 10.4% after the footwear company's first quarter result fell short of Wall Street's forecasts. The company also issued second quarter guidance that came in below analysts' estimates.
KeyCorp fell 2.2% after the bank's latest quarterly snapshot missed analysts' targets as income from fees declined.
Shares in cigarette makers fell after Senate Majority Leader Mitch McConnell said he plans to introduce legislation to raise the minimum age to buy tobacco products from 18 to 21 nationally.
The Senate leader said his bill will cover all tobacco products, including vaping devices, and will continue to hold retailers responsible for verifying the age of anyone buying tobacco products. About a dozen states have already enacted laws raising the minimum legal age to 21.
Altria Group fell 3.2% and Philip Morris International dropped 1.2%.
Pinterest and Zoom surged in their first day of trading. Pinterest, which lets users share images of crafts and other projects, jumped 28.4% from its IPO pricing of $19. Zoom, a maker of video conference technology, vaulted 72.2% from its IPO pricing of $36.
The San Francisco-based companies' market debuts came less than a month after ride-hailing service Lyft began trading. In what might be a cautionary tale for other anticipated tech IPOs, Lyft shares surged on their first day but have since plunged back below their original offering price.
The market also got a boost from positive economic data on U.S. retail sales and unemployment claims.
The Commerce Department said retail sales surged in March at the fastest pace since late 2017, driven by increased spending on autos, gasoline, furniture and clothing. The gains are a sign that the healthy job market has likely made consumers more eager to spend in ways that boost overall economic growth.
Meanwhile, the Labor Department said weekly applications for unemployment aid declined last week.
"Let's face it, the consumer is the driving force of the U.S. economy, and when you get good initial jobless claims and good retail sales it just confirms the fact that the consumer is very strong, and that's what's giving investors a little bit of comfort," Cavanaugh said.
U.S. stock markets are closing Friday in observance of the Good Friday holiday.
Energy futures finished mostly higher Thursday. Benchmark U.S. crude oil rose 0.4% to settle at $64 per barrel. Brent crude, the international standard, added 0.5% lower to close at $71.97 per barrel.
Wholesale gasoline gained 1.5% to $2.07 per gallon, while heating oil inched 0.1% higher to $2.07 per gallon. Natural gas fell 1.1% to $2.49 per 1,000 cubic feet.
Gold slipped 0.1% to $1,276 per ounce, silver rose 0.1% to $14.96 per ounce and copper fell 1.6% to $2.92 per pound.
The dollar fell to 111.93 Japanese yen from 112.07 yen late Wednesday. The euro weakened to $1.1230 from $1.1298.