U.S. equities lingered yet again on Thursday, as political machinations, violent protests in California and earnings from Amazon.com, Inc. (NASDAQ:AMZN) after the close gained the bulk of the attention.
Reports crossed late in the day that President Trump will tighten sanctions on Iran in response to a ballistic missile test — with the caveat that the nuclear deal would remain in place for now.
In the end, the Dow Jones Industrial Average lost a fraction, the S&P 500 gained 0.1%, the Nasdaq Composite lost 0.1% and the Russell 2000 goes into Friday 0.3% lower. Treasury bonds were little changed, the dollar rebounded from early weakness to finish higher, gold gained 0.9% and crude oil fell 0.6%.
Defensive yield-sensitive sectors did best today, with REITs up 1.3% and utilities up 1%. Telecoms and materials were the laggards, down 1.3% and 0.5%, respectively.
United States Steel Corporation (NYSE:X) gained 9.6% after enjoying an upgrade from analysts at Bank of America Merrill Lynch on a positive view of global steel prices. Macy’s Inc (NYSE:M) gained 5.2% on a NY Post report the company is seeking a buyer. And Costco Wholesale Corporation (NASDAQ:COST) gained 3.9% on a 5% jump in January comp-store sales, beating a 3.5% estimate.
Facebook Inc (NASDAQ:FB) fell 1.8% after reporting a beat Wednesday night on concerns about a future jump in capital spending. Ralph Lauren Corp (NYSE:RL) fell 12.3% despite reporting solid earnings as results were overshadowed by news of the departure of CEO Stefan Larsson after disagreements on the direction of the brand with its founder.
After the close, AMZN reported mixed results with earnings of $1.54 per share beating estimates of $1.40 but revenues of $43.7 billion falling short of the $44.9 billion analysts were expecting. Shares collapsed 4.1% in after-hours trading on the disappointment.
Separately, troubled action camera maker GoPro Inc (NASDAQ:GPRO) reported bottom-line beat with earnings of 29 cents per share beating estimates of 21 cents but revenue coming up short at $540.6 million vs. the $576 million expected after a tough holiday-season recall of its new Karma drone (which is now, finally, back on sale).
Overall, the technical situation remains unchanged: Narrowing breadth, extreme sentiment measures, overbought technicals and a dangerous “island gap” formation all suggest stocks are vulnerable to a downside move here. Something that is long overdue: The last 1% downside move was in October, 78 days ago as volatility collapses to a 10-year low.
Keep an eye on the breakout in gold, a possible precursor to a bout of market volatility. The move benefited the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) recommended to Edge subscribers with a 2.2% gain.