MARKET SNAPSHOT: Stock Market Ends Solid Week On A Sour Note As Bank Shares Slump After Earnings
By Mark DeCambre, MarketWatch , Ryan Vlastelica
Global tensions hover as investors watch trade tensions, Syria
U.S. stock benchmarks on Friday wrapped up a solid week on a down note as better-than-expected first-quarter earnings failed to stir buying appetite on Wall Street, underlining concerns about lofty quarterly expectations for American corporations, high valuations and geopolitical anxiety.
Need to know:This jumpy stock market may have found a bottom--here's why (http://www.marketwatch.com/story/this-jumpy-stock-market-may-have-found-a-bottom-heres-why-2018-04-13)
What are the main benchmarks doing?
The Dow Jones Industrial Average fell 122.91 points, or 0.5%, to end at 24,360.14. The S&P 500 index declined 7.69 points, or 0.3%, to finish at 2,656.30. The Nasdaq Composite Index closed off 33.60 points, or 0.5%, at 7,106.65.
Financials were the worst-performing sector, off 1.6%.
Major indexes have trended to the upside recently. For the week, the Dow booked a gain of 1.8%, while the S&P rose 2% and the Nasdaq produced a weekly gain of 2.8%.
Check out:After 10 fat years for stock investors, a lean decade is looming (http://www.marketwatch.com/story/the-2010s-were-one-of-the-best-decades-for-stocks-ever-uh-oh-2018-04-11)
And see:Geopolitical risk matters again--here's what it means for the markets (http://www.marketwatch.com/story/commodities-are-beating-the-stock-market-as-geopolitical-risk-returns-2018-04-11)
What's driving markets
Earnings could prove to be a bright spot for investors, who have been looking for fundamental news (http://www.marketwatch.com/story/stock-market-bulls-are-looking-for-earnings-to-ride-to-the-rescue-2018-04-07) to trade on, as opposed to uncertainties surrounding U.S. politics and trade with China. Potential U.S. military action against the Syrian government (http://www.marketwatch.com/story/us-and-allies-seek-unified-plan-for-military-strike-on-syria-2018-04-12) has also contributed to caution of late, though the market impact from a strike is expected to be minimal (http://www.marketwatch.com/story/why-stock-investors-shouldnt-fret-a-us-missile-strike-on-syria-in-one-chart-2018-04-12).
The first-quarter earnings season is expected to be strong, with companies posting their strongest rates of both earnings and revenue growth in years. While the high expectations could increase the likelihood of disappointments (http://www.marketwatch.com/story/hopes-are-high-for-this-earnings-seasonand-that-could-prove-dangerous-2018-04-09), strong results could assuage concerns that market valuations aren't justified by economic activity, and they could limit volatility if stocks move on their own fundamentals, as opposed to macroeconomic trends, as has recently been the case.
Read:The 'stock picker's market' has gone up in smoke (http://www.marketwatch.com/story/the-stock-pickers-market-has-gone-up-in-smoke-2018-03-28)
Political issues will likely remain in focus, despite the ramp-up of earnings.
The White House plans to step up pressure on China to make trade concessions, via a plan for fresh tariffs (http://www.marketwatch.com/story/white-house-plans-to-maintain-hard-line-stance-to-push-china-trade-concessions-2018-04-12) and a threat to block Chinese technology investments in the U.S., according to a report. Details of which Chinese products are on the hit-list of $100 billion in tariffs could be revealed as soon as next week. For its part, China is considering lining up allies, including European countries, against the U.S.
Meanwhile, President Donald Trump has directed senior aides to look into the possibility of joining the Trans-Pacific Partnership (http://www.marketwatch.com/story/trump-directs-lighthizer-kudlow-to-study-re-entering-tpp-2018-04-12), which could pose a further challenge to China. The trade imbalance between the world's two biggest economies grew, as China posted a sharp jump in its trade surplus (http://www.marketwatch.com/story/chinas-trade-surplus-with-the-us-rises-sharply-2018-04-13) with the U.S. That rise came even as China logged its first overall monthly trade deficit in 13 months (http://www.marketwatch.com/story/china-posts-surprising-march-trade-deficit-2018-04-13).
Market participants also closely watching tensions in the Middle East. Trump on Wednesday warned Russia that he was ready to launch an imminent military attack on its ally Syria, but toned down his rhetoric on Thursday (https://twitter.com/realDonaldTrump/status/984374422587965440).
Check out: Scooter Libby gets pardoned by Trump, White House announce (http://www.marketwatch.com/story/scooter-libby-gets-pardoned-by-trump-white-house-announces-2018-04-13)
Read:Head of the world's largest asset management firm says this is key for stock-market investors (http://www.marketwatch.com/story/head-of-worlds-largest-asset-management-firm-says-this-is-key-for-stock-market-investors-2018-04-12)
Which stocks look like key movers?
Bank stocks were in focus following results from a trio of major firms.
JPMorgan (JPM) fell 2.7% despite first-quarter earnings and (http://www.marketwatch.com/story/jpmorgans-profit-rises-35-to-top-estimates-2018-04-13-7485250)revenue (http://www.marketwatch.com/story/jpmorgans-profit-rises-35-to-top-estimates-2018-04-13-7485250) that topped Wall Street estimates.
Citigroup Inc. (C) reported earnings that topped consensus forecasts (http://www.marketwatch.com/story/citigroup-profit-beats-views-revenue-matches-2018-04-13), and revenue that was in line with expectations. The stock lost 1.6%. Wells Fargo(WFC) also reported better-than-expected earnings (http://www.marketwatch.com/story/wells-fargo-beat-views-while-revenue-declines-2018-04-13), though revenue declined year-over-year. The stock fell 3.4%.
Read:Expect a strong first quarter for bank earnings, but more questions lie ahead (http://www.marketwatch.com/story/bank-earnings-expect-a-strong-first-quarter-but-more-questions-lie-ahead-2018-04-10)
(http://www.marketwatch.com/story/bank-earnings-expect-a-strong-first-quarter-but-more-questions-lie-ahead-2018-04-10)Zillow Group Inc. (ZG) shares declined 7.3%. The real estate listings company said Thursday it will get into the business of buying and flipping homes (http://www.marketwatch.com/story/zillow-is-entering-the-home-flipping-business-2018-04-12), which is considered by some to be high risk.
SeaWorld Entertainment Inc. (SEAS) late Thursday disclosed notice of possible civil action from the Securities and Exchange Commission (http://www.marketwatch.com/story/seaworld-shares-fall-on-disclosure-on-possible-sec-action-2018-04-12) (http://www.marketwatch.com/story/bank-earnings-expect-a-strong-first-quarter-but-more-questions-lie-ahead-2018-04-10). The stock finished 3% higher.
Amazon.com Inc.(AMZN) shares lost 1.2%. Trump issued a surprise executive order Thursday night (http://www.marketwatch.com/story/trump-launches-task-force-to-examine-postal-services-operations-finances-2018-04-12) calling for look at the U.S. Postal Service's finances and operations, along with its position in the package delivery industry. Trump has blamed Amazon in recent weeks (http://www.marketwatch.com/story/amazon-shares-keep-falling-after-trump-tweets-concerns-about-us-postal-service-taxes-2018-03-29) for the woes of the USPS and has said that the company isn't paying enough tax, charges experts have disputed.
Don't miss:Trump isn't tweeting nearly enough, these Amazon stock investors say (http://www.marketwatch.com/story/trump-isnt-tweeting-nearly-enough-these-amazon-stock-investors-say-2018-04-04)
What are analysts saying?
Brad McMillan, chief investment officer for Commonwealth Financial Network, said expectations have gotten quite high for coming corporate earnings, which could set the market up for a rocky ride.
"It was a classic buy-rumor-sell-the-news response, because expectations are so high for earnings growth that even very good results may not be good enough," he said.
McMillan also said that recent gauges of sentiment, although they have come down somewhat, still suggest that "things are as good as it gets and raises the question 'how much better can it get from here?'"
"The bank earnings looked decent, but they weren't spectacular, and they certainly weren't great enough to push the stocks over important technical resistance," said Wayne Kaufman, chief market analyst at Phoenix Financial Services, who noted that losses in both Citigroup and JPMorgan accelerated after they failed to hold above their 50-day moving averages (http://www.marketwatch.com/story/bank-stock-losses-accelerate-after-failing-to-hold-above-key-level-2018-04-13).
"Everyone knows this season will be good in terms of growth, but investor demand has been lackluster, with low volume on both up days and down days. If a really good season doesn't act as a catalyst for stocks to move higher, that's going to be a red flag going forward."
Read:What traders want to see to feel confident momentum has shifted to the upside (http://www.marketwatch.com/story/why-mondays-rally-may-not-mean-momentum-has-shifted-to-the-upside-2018-03-27)
What is on the economic docket?
The University of Michigan's consumer sentiment index (http://www.marketwatch.com/story/university-of-michigan-consumer-sentiment-index-slips-to-three-month-low-on-trade-fears-2018-04-13) in April fell to a reading of 97.8, down from 101.4 in March. Economists polled by MarketWatch expected a reading of 101. Job openings in the U.S. fell slightly in February (http://www.marketwatch.com/story/job-openings-fall-slightly-in-february-from-a-near-record-high-2018-04-13) from a near record at the start of the year.
St. Louis Fed President James Bullard said he had argued, at the Federal Reserve's most recent meeting, that the central bank could leave interested rates unchanged, contradicting a statement (http://www.marketwatch.com/story/feds-minutes-got-it-wrong-says-bullard-not-all-members-see-need-for-higher-interest-rates-2018-04-13) in the Fed's minutes that "all participants" thought further increases were necessary.
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April 13, 2018 16:38 ET (20:38 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.