Big drop for IBM takes Dow to the red
US stocks were range-bound on Wednesday, 18 April 2018 finishing the session little changed. Investors took in the latest batch of first quarter earnings, which featured reports from IBM and Morgan Stanley and watched crude oil futures return to their highest level in more than three years. The Dow industrials ended lower Wednesday as IBM's shares got walloped; however, gains in shares of energy-related firms helped the broader market post modest gains.
The Dow Jones Industrial Average ended down 38.56 points, or off 0.2%, at 24,748.07, with shares of International Business Machines exacting a roughly 80-point toll on the price-weighted average. The S&P 500 index advanced about 2.25 points, or about 0.1%, at 2,708.64, even as six the index's 11 main sectors registered a loss, led by a decline in consumer staples. Energy shares led the gains. Nasdaq Composite Index closed up 14.14 points, or 0.2%, at 7,295.24.
First-quarter earnings reports have grabbed investors' attention this week, with Netflix, Goldman Sachs and UnitedHealth Group among the companies that have posted encouraging results.
On the downside, the consumer staples space was the worst-performing sector, losing 0.9%, with tobacco names leading the retreat after analysts at Goldman downgraded shares of Altria to 'Neutral' from 'Buy'; Altria shares lost 3.9%.
IBM's stock fell 7.5%, marking its worst one-day decline since April 19, 2013, as analysts noted its earnings was driven by a one-time tax gain. In addition, IBM Chief Financial Officer James Kavanaugh told analysts on the tech titan's conference call that they shouldn't count on a continued boost from new mainframe sales.
Shares in banking giant Morgan Stanley closed marginally higher, up less than 0.1%, after its quarterly profit topped estimates. Morgan Stanley joined other large banks whose stock prices fell even as earnings beat consensus forecasts.
Trading volume was light once again on Wednesday, with just 770 million shares changing hands at the New York Stock Exchange, about 17% less than the 50-day moving average.
Bullion prices ended higher on Wednesday, 18 April 2018. Gold futures notched their highest finish in a week but maintained the tight trading range seen over the last several sessions, as U.S. stocks struggled to hold gains and the dollar stabilized. Silver registered big gains.
Prices for the metal saw little action in electronic trading immediately after the release of the Federal Reserve's Beige Book. The snapshot of domestic economic activity shows growth at a modest to moderate pace in March and early April, the same rate as earlier in the year.
June gold rose $4, or 0.3%, to settle at $1,353.50 an ounce. The settlement was the highest since April 11, 2018. Prices had slipped by less than 0.1% Tuesday after edging higher by 0.2% Monday. Gold tallied a rise of roughly 0.8% last week.
Oil prices climbed on Wednesday, 18 APril 2018 to settle at their highest levels in nearly 3 years, following a surprise decline in weekly U.S. crude supplies and expectations that major oil producers will remain committed to curbing production.
Traders were also looking ahead to the outcome of the joint Organization of the Petroleum Exporting Countries and non-OPEC ministerial monitoring committee meeting expected to be held later this week. At the last joint Ministerial Monitoring Committee, or JMMC, gathering held in late January, the committee said OPEC and its allies saw compliance with production-cut agreement at 129% in December 2017.
On Thursday, investors will receive the weekly Initial Claims report (consensus 226K), the Philadelphia Fed Index for April (consensus 21.0), and the Conference Board's Leading Economic Index for March (consensus +0.4%).
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