Home' Trinidad and Tobago Guardian : May 11th 2014 Contents MAY 11 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
The Dow Jones industrial
average hit a record on
Friday, but without much
conviction after a choppy
day of trading during
which investors couldn t
make up their minds
whether to buy or sell.
The blue-chip index flitted between small
gains and losses at least a dozen times, and
ended up beating its old record set last week
by less than 2.5 points, or just 0.02 per cent.
"The market is having trouble finding direc-
tion here," said David Kelley, JPMorgan Funds
chief global strategist. But he added, "I believe
for the rest of the year, a warming economy
... will push the market up."
The Standard & Poor s 500 index also eked
out a gain, but is no higher than it was in early
March, after waffling between weekly gains
and losses most of that time.
On Friday, stocks fell broadly from the open
as investors took in the latest corporate earnings
reports. It was an odd day in which winners
became losers, and vice versa.
Stocks of utilities have been in favour lately
because of their stable earnings and fat div-
idends, but investors dumped them Friday,
and they closed 1.4 per cent lower. That was
the biggest drop of the S&P 500 s ten sec-
By contrast, a few big-name Internet stocks
that had been crushed in a recent sell-off in
that industry managed healthy gains.
Netflix announced it was raising prices for
new subscribers of its streaming video service
and investors cheered, lifting its stock 2.0 per
cent. Tesla Motors and LinkedIn, both down
more than 10 per cent since April, rose 2.0
per cent and 2.5 per cent, respectively.
The Dow edged up 32.37 points for the day,
or 0.2 per cent, to 16,583.34. That narrowly
beat its previous record high of 16,580.84 set
on April 30.
The S&P 500 index rose 2.85 points, or 0.2
per cent, to 1,878.48. The Nasdaq composite
rose 20.37 points, or 0.5 per cent, to 4,071.87.
Mixed messages from earnings reports left
investors without clear direction.
CBS fell $1.27, or 2.0 per cent, to $56.74
after reporting late Thursday that its first-
quarter revenue had fallen short of analysts
projections. Sales from advertising slumped
12 per cent.
Ralph Lauren dropped $3.18, or 2.0 per cent,
to $148.81 after its forecast for sales for the
current quarter disappointed investors.
Hilton Worldwide Holdings rose 43 cents,
or 2.0 per cent, to $23.07 after exceeding ana-
lysts expectation for earnings. And Gap rose
$1.28, or 3.0 per cent, $40.52. The clothes
store chain reported strong sales for April and
issued a forecast for the current quarter that
was better than investors were expecting.
With most companies out with their results,
first-quarter earnings for the S&P 500 are
expected to rise 3.4 per cent, according to
S&P Capital IQ. That s a respectable perform-
ance but still down from a nearly 8.0 per cent
gain in the fourth quarter.
Companies reporting earnings next week
include Macy s, Deere & Co, Cisco Systems
and Wal-Mart and Nordstrom.
Investors were also watching the situation
in Ukraine. On Friday, fierce fighting in eastern
Ukraine left at least seven dead. Pro-Russian
militants are pressing ahead with plans for an
independence referendum this weekend despite
objections from Moscow.
Erik Davidson, deputy chief investment offi-
cer of Wells Fargo Private Bank, said investors
are still jittery five years after the financial
crisis sent stocks tumbling to 12-year lows.
"There is always this worry about what is
the next shoe to drop," he said. "So places we
only learned about before in geography class
become important: Crimea, Ukraine."
The yield on the 10-year Treasury note rose
to 2.62 per cent from 2.61 per cent on Thurs-
day. The price of oil fell 27 cents, or 0.3 per
cent, to US$99.99 a barrel.
Among other stocks making big moves:
• Symantec rose 66 cents, or 3.0 per cent,
to US$20.79. The security software maker said
cost cuts helped boost its fourth-quarter profit
margins and net income.
• News Corp rose 89 cents, 5.0 per cent,
to US$18. The publishing company, which
owns The Wall Street Journal, reported net
income fell in its fiscal third quarter, but still
beat analysts expectations due to better book
publishing. That unit thrived thanks to of the
"Divergent" series, which was launched as a
movie in March. AP
LONDON---Renewed jitters about Ukraine as pro-
Russian militants pressed ahead with plans for
an independence referendum weighed on markets
Ukraine continued to loom large for investors. Insurgents
in the country s east are preparing for a weekend referendum
on independence, a vote similar to the plebiscite that paved
the way for Moscow s annexation of Crimea in March. Prepa-
rations have continued despite a call by Russian President
Vladimir Putin to put off the vote amid negotiations with the
West over Ukraine s future.
In Europe, the FTSE 100 index of leading British shares
closed down 0.4 per cent at 6,814.57 while Germany s DAX
fell 0.3 per cent to 9,581.45. The CAC-40 in France ended 0.7
per cent lower at 4,477.28.
The main point of interest was the euro, after its sharp
turnaround Thursday in the wake of a hint from European
Central Bank President Mario Draghi that the bank could ease
monetary policy further next month to boost inflationary
pressures across the 18-country eurozone. Standing at an
annual rate of 0.7 per cent, inflation in the eurozone is below
the ECB s target of just below 2.0 per cent.
The ECB could, for example, cut interest rates which would
make the euro less attractive. That s largely why the euro is
down a further 0.6 per cent Friday at $1.3756. Before Draghi
made his remarks, the euro nearly hit US$1.40 for the first
time in two-and-a-half years.
"Draghi s interjection has no doubt provided euro bulls with
the perfect opportunity to consolidate gains and reflect upon
a decent run, though whether it has deprived the euro of a
major pillar of support to dissuade them from regrouping, is
another matter," said Neil Mellor, senior currency strategist
at Bank of New York Mellon.
In the US, the Dow Jones industrial average was down 0.1
per cent at 16,536 while the broader S&P 500 index, which
nearly struck another all-time high on Thursday, fell 0.3 per
cent to 16,536.
"As earnings season winds down, we are still lacking the
vital spark to send this market higher," said Brenda Kelly, chief
market strategist at IG.
Earlier in Asia, the mood was mixed after lower than antic-
ipated Chinese inflation figures. Though the drop in the annual
rate to 1.8 per cent may give Beijing more leeway to stimulate
the slowing Chinese economy if needed, it also underlined
the extent to which domestic demand has weakened.
Hong Kong s Hang Seng closed up 0.1 per cent at 21,862.99
while Japan s Nikkei 225 stock average gained 0.3 per cent to
14,199.59. South Korea s Kospi edged up 0.3 per cent.
Ukraine referendum tensions weigh on global markets
Dow inches to record as
earnings reports wind down
People walk past an electronic stock indicator
in Tokyo Thursday, May 8, 2014. Asian stock
markets were mostly higher Thursday after
China's trade improved and Federal Reserve
Chair Janet Yellen vowed low interest rates
would continue until the US job market is
healthy. Tokyo's Nikkei 225 stock index, the
region's heavyweight, advanced 130.33 points,
or 0.9 per cent to 14,163.78. (AP)
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