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Upbeat Earnings, Retail Sales Data May Generate Buying Interest

iHub News
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April 15 2024 9:10AM

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following the sell-off seen last Friday.

A positive reaction to earnings news from Goldman Sachs (NYSE:GS) may generate early buying interest, as the investment banking company is surging by 4.1 percent in pre-market trading.

The jump by Goldman Sachs comes after the company reported first quarter earnings that far exceeded analyst estimates on better than expected revenues.

Positive sentiment may also be generated in reaction to a Commerce Department report showing much stronger than expected U.S. retail sales growth in the month of March.

The Commerce Department said retail sales climbed by 0.7 percent in March after advancing by an upwardly revised 0.9 percent in February.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a pullback by sales by motor vehicle and parts dealers, retail sales jumped by 1.1 percent in March after climbing by 0.6 percent in February. Ex-auto sales were expected to rise by 0.4 percent.

Bargain hunting may also contribute to an early rebound on Wall Street, as traders pick up stocks at relatively reduced levels.

The steep drop seen last Friday dragged the Dow down to its lowest closing level in well over two months, while the S&P 500 fell to a nearly one-month closing low.

U.S. stocks closed sharply lower on Friday, as geopolitical tensions, inflation worries and mixed earnings and guidance from major banks rendered the mood a bit bearish.

The major averages all ended in the red. The Dow ended with a loss of 475.84 points or 1.2 percent at 37,983.24. The S&P 500 tumbled 75.65 points or 1.5 percent to 5,123.41, while the Nasdaq settled at 16,175.09, plunging 267.10 points or 1.6 percent.

The Dow shed nearly 2.5 percent for the week, while the S&P 500 and the Nasdaq dropped by about 1.6 percent and 0.5 percent, respectively.

Shares of Citigroup (NYSE:C) fell by about 1.7 percent after the company reported a 27 percent drop in net income in the first quarter, due to lower non-interest revenue, as well as higher expenses and cost of credit.

JPMorgan Chase & Co. (NYSE:JPM) tumbled nearly 6.5 percent, weighed down by lower net interest income. The lender reported a 6 percent increase in first quarter profit. For the first quarter, net income increased to $13.42 billion or $4.44 per share from $12.62 billion or $4.10 per share in the prior-year quarter.

Wells Fargo Inc (NYSE:WFC) reported first-quarter net income of $4.62 billion or $1.20 per share, down from last year’s $4.99 billion or $1.23 per share. The stock ended modestly lower.

Inflation concerns continued to weigh on the markets, as the Labor Department released a report showing import prices in the U.S. increased by slightly more than expected in the month of March.

The report said import prices climbed by 0.4 percent in March after rising by 0.3 percent in February. Economists had expected import prices to increase by another 0.3 percent.

Import prices also rose by 0.4 percent compared to the same month a year ago, marking the first year-over-year increase since January 2023.

Meanwhile, the Labor Department said export prices rose by 0.3 percent in March after climbing by a revised 0.7 percent in February. The increase in export prices matched economist estimates.

Compared to the same month a year ago, export prices were down by 1.4 percent in March following a 1.8 percent slump in February.

A report showing a bigger than expected drop in consumer sentiment in April also generated selling pressure. The University of Michigan said its consumer sentiment fell to 77.9 in April from 79.4 in March. Economists had expected the index to edge down to 79.0.

The report also said year-ahead inflation expectations rose to 3.1 percent in April from 2.9 percent in March, climbing just above the 2.3-3.0 percent range seen in the two years prior to the pandemic.