After holding in positive territory for most of the day, the major indices closed Monday in the red. Concerns over Q1 earnings were blamed for the loss. While FactSet estimates profits will fall about 8.5% year over year, investors seem to fear that they could be even worse.
Alcoa Inc (AA), traditionally the first company to report earnings, dropped 4.5% in after-hours trading following its announcement. While earnings were better than expected, they were down 92% from a year ago, revenue missed estimates and guidance was disappointing.
Several big banks are expected to report earnings this week, including JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC) and Citigroup Inc (C), and all are forecast to have weak results.
WTI crude oil gained 1.6% to close above $40 a barrel for the first time in more than two weeks. But the energy sector didn’t follow through, falling 0.4%. Baker Hughes Incorporated (BHI) lost 3.2% following a negative article in Barron’s.
The U.S. dollar declined 0.3% against a basket of 16 currencies. As a result, gold gained 1.1%, at $1,256.70 an ounce. Miner Freeport-McMoRan Inc (FCX) gained 4.6%, and Newmont Mining Corp (NEM) jumped 6.9%.
At Monday’s close, the Dow Jones Industrial Average fell 21 points to 17,566, the S&P 500 lost 6 points at 2,042, the Nasdaq was down 17 points at 4,833 and the Russell 2000 fell 3 points to 1,094.
The NYSE Composite’s primary exchange traded 912 million shares with total volume of 3.5 billion. The Nasdaq crossed 1.5 billion shares. On the Big Board, advancers outpaced decliners by 1.5-to-1, and on the Nasdaq, decliners led by a fraction. Block trades on the NYSE increased to 5,994 from 5,462 on Friday.
A reader recently asked what gold miner I preferred. I like GAMCO Global Gold, Natural Resources & Income Trust (GGN), which is not a miner but a closed-end fund with an objective of income and growth.
Managed by Gabelli Funds, GGN seeks to accomplish its dual goals by investing about 80% of its assets in stocks of companies that mine gold and other natural resources and then writing call options to capture income. While it typically moves more slowly than a traditional mining stock, GGN has a yield of almost 13%, with distributions paid monthly.
On the chart, GGN broke from a “V” bottom on Monday, is on a new MACD buy signal and shows strong accumulation.
Conclusion
Mining stocks are behaving better than stocks in other sectors, so I’ll continue to focus on them in an upcoming report.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
