Stocks finished range-bound on Wednesday, with the Dow Jones Industrial Average closing with a 0.2% loss after bouncing around the unchanged line as investors continue to digest the flow of Q1 earnings. Treasury bonds declined slightly, pushing up yields. The dollar weakened. Gold inched higher. And crude oil gained 23 cents to move nearer to the $70-a-barrel threshold.
IBM (NYSE:IBM) fell 7.5% after reporting results, dropping back to its February-March lows, despite reporting better-than-expected earnings and revenues. Traders focused on weak profitability margins, the quality of the revenues (less from cloud), and a cautious outlook from management.
Financial stocks continued to struggle as well, falling 0.4% as a group, despite blow-out results from Morgan Stanley (NYSE:MS). This is just the latest in a long line of big banks to see shares decline following solid results amid a profit taking dynamic on fears higher interest rates could dampen loan activity.
Altria Group Inc (NYSE:MO) shares lost 3.9% after suffering a downgrade from Goldman Sachs analysts.
And the United States Oil Fund LP (ETF) (NYSEARCA:USO) surged 3.5% to extend an impressive rally in April as initial concerns about geopolitics in the Middle East could disrupt production are now being replaced with a realization that existing OPEC supply caps are finally draining inventories in a big way heading into the summer driving season.
Trading volumes remain subdued, with just 770 million shares on the NYSE — 17% below the 50-day average.
Aside from the rise in crude oil (inflationary, raises risk of four Fed hikes this year) the other big story in play is the persistent yield curve flattening coming from the bond market, a loud signal that something isn’t right.
Check out Serge Berger’s Trade of the Day for April 19.
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.