On 26 April, 2016 – Stocks were mixed

Investors focused on earnings while they waited for central banker policy announcements.
United States
United States markets were little changed Tuesday as health care stocks fell on continued scrutiny of drug prices while energy companies advanced with the price of oil. Earnings reports drove much of the action. The Dow Jones industrials edged up 0.1 percent and the S&P added 0.2 percent. The Nasdaq however, retreated 0.2 percent.
Drug company stocks fell as investors looked ahead to the latest Congressional panel on drug prices. The Senate Aging Committee will hold its third meeting on drug prices on Wednesday. Investors in drug companies worry that Congressional scrutiny will make it harder for the companies to keep raising drug prices and keep their profits growing. Shares of Alexion Pharmaceuticals, Endo International and Vertex Pharmaceuticals retreated. DuPont shares advanced after it said it expected a larger profit for the year and said the strong dollar would not hurt its results as much as it had predicted. Mining and construction equipment companies also gained ground. Ingersoll-Rand was up after the company posted a larger than expected profit and raised its profit projections for the year. Paccar advanced after it reported a bigger than expected profit. Ryder System gained posted a bigger profit and greater revenue than expected. Corning declined after its sales were weaker than expected.
After US markets closed, AT&T and Apple reported earnings. AT&T reported a 24.4 percent jump in quarterly revenue, largely helped by the acquisition of satellite TV operator DIRECTV. Net income attributable to AT&T rose to $3.80 billion in the first quarter ended March 31 from $3.26 billion. On a per share basis, net income fell to 61 cents from 63 cents. The company, which bought DIRECTV for $48.5 billion last year, said total operating revenue rose to $40.53 billion from $32.58 billion.
Apple reported quarterly results below targets and it forecast another disappointing quarter, while sales of iPhones declined for the first time. Apple also said it is raising its capital return program by $50 billion through a $35 billion increase in its share buyback authorization and a 10 percent rise in the quarterly dividend. Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago. Earnings were $1.90 per share. Revenue of $50.56 billion missed expectations of $51.97 billion.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.80 to US$1,241.70. Copper futures were down 0.3percent to US$2.25. WTI spot crude was up US$1.42 to US$44.06. Dated Brent spot crude was up US$1.35 to US$45.83. The US dollar declined against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it was higher against the yen. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was up 4 basis points to 2.76 percent while the yield on the 10 year note was up 3 basis points to 1.94 percent.
Europe
Shares were mixed Tuesday. The indices initially advanced thanks to rising crude oil prices and some strong corporate financial results from the Eurozone. However, the markets pared early gains on investor caution before the Wednesday Federal Reserve statement. The Fed is widely expected to leave interest rates unchanged, but traders are likely to keep a close eye on the accompanying statement for clues about the outlook for the next meeting in June. The FTSE advanced 0.4 percent while the SMI was virtually unchanged. Both the CAC and DAX retreated 0.3 percent.
Bayer was down after the company affirmed its 2016 outlook after delivering 15.7 percent growth in underlying core earnings for the first quarter. ThyssenKrupp was lower after it lost out an A$50 billion contract to French competitor DCNS Group. Software AG dropped despite confirming its 2016 outlook. In Paris, industrial gas manufacturer Air Liquide declined after it unveiled plans to raise up to €3.5 billion in new shares. Technology firm Safran advanced after it reported a 7.8 percent rise in adjusted revenue for the three months ending in March.
Orange Group advanced after the telecoms operator confirmed its forecast of higher earnings for fiscal 2016 after reporting higher restated EBITDA and revenues for its first quarter. In London, BP jumped after the company posted a surprise profit for the first quarter after adjustments for one-time items and inventory charges. Whitbread rose after reporting a rise in fiscal 2016 earnings and lifting its dividend by 10 percent. British American Tobacco finished lower after warning that a negative impact from currency changes could have a detrimental effect on its full-year profit. Standard Chartered surged after its profit rebounded in the first quarter, as reduced loan losses offered signs of a turnaround following a loss-making 2015.
Asia Pacific
Asian stocks erased early losses to end mixed Tuesday. Oil price volatility kept investors in a defensive mode ahead of central bank meetings in the US, Japan and New Zealand. Oil prices pared early gains in late afternoon Asian trading after falling sharply overnight after Saudi Arabia reported imminent completion of a key oilfield expansion project and analysts warned of bearish fundamentals.
The Nikkei lost 0.5 percent as the yen held Monday’s gains against the US dollar despite speculation the Bank of Japan will expand stimulus at its policy meeting later this week. Exporters Canon, Honda Motor, Mazda, Nissan Motor, Panasonic and Toyota ended down. Mitsubishi Motors dropped on a Nikkei report the automaker used fuel economy testing methods that were not compliant with Japanese regulations since 1991. Japan Steel Works soared after raising its annual profit forecast.
Both the S&P/ASX and All Ordinaries were down 0.3 percent dragged down by mining and energy shares as a rally in commodity prices ran out of steam. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group declined as the recent rally in iron ore prices paused. Energy stocks Origin Energy and Santos retreated after US crude futures declined overnight following three weeks of gains. Banks were mixed, with ANZ and NAB declining while Commonwealth and Westpac advanced.
The Shanghai Composite reversed early losses to end 0.6 percent higher amid the regulatory crackdown on speculative trading in commodity futures markets. The Hang Seng added 0.5 percent.
The Kospi was up 0.3 percent after the country’s top financial regulator outlined intensified restructuring measures for shipping lines and shipbuilders. Investors shrugged off data showing the country’s economic growth halved in the first quarter from the previous three months in the wake of sagging exports and sluggish consumption. Real GDP grew 0.4 percent in the first quarter, down from a 0.7 percent increase in the fourth quarter.
The Sensex rallied 1.3 percent as oil prices rebounded from overnight losses and Maruti Suzuki, India’s largest carmaker, delivered better than expected quarterly earnings.
Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Australia reports first quarter consumer price index. The Eurozone releases April M3 money supply data. The UK releases first quarter preliminary gross domestic product. In the US, preliminary international trade in goods for March and April pending home sales index will be posted along with weekly EIA petroleum status report. The Federal Reserve will announce its monetary policy decision.
*Note — all releases are listed in local time.

Source: Fidelity

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