Earnings In Focus As Another Quake Hits Japan Ways To Money

Apr 10

Earnings In Focus As Another Quake Hits Japan

- The major U.S. index futures are pointing to a higher opening on Monday, with a modest pullback in oil likely offering some support to the futures. Japan was hit by another powerful quake, triggering tsunami alert, exactly a month after the Sendai earthquake. With the geopolitical concerns showing no signs of alleviating, traders may look ahead to the earnings season, which unofficially begins with Alcoa’s (AA) earnings due after the markets close.

U.S. stocks closed the week ended April 8th mostly lower, snapping their two-week winning streak. Geopolitical and sovereign debt risks posed the gravest threat, while uncertainty over the global interest rate outlook also impacted stocks to some extent. Airline, transportation and housing stocks served as drags, while gold and technology stocks were standout performers.

Last Monday, the major averages went about a consolidation move, with the Dow Industrials advancing, while the Nasdaq Composite Index and the S&P 500 Index receded. The lackluster mood came about despite a pick up in M&A activity. The major averages meandered to another mixed close on Tuesday, as traders reacted to a rating downgrade for Portugal, a Chinese rate hike announcement and the release of the FOMC minutes.

The minutes showed a definite rift among the members over their interest rate outlook, although there was unanimity in the view that QE II measures should be completed by June as planned. Additionally, the minutes showed that a rate hike is not imminent despite the recent pick up in inflation.

With the markets fully digesting the minutes released during the previous session and reassured by the knowledge that accommodative monetary policy is here to stay, stocks moved higher on Wednesday. However, stocks retreated modestly on Thursday after the European Central Bank announced a quarter basis-point increase in interest rates.

The weakness continued on Friday, as traders expressed apprehension over a potential government shutdown due to the lack of a consensus on a budgetary proposal and the surrounding geopolitical uncertainty, which sent oil sharply higher.

For the week ended April 8th, the Dow Industrials added 0.03 percent, while the S&P 500 Index and the Nasdaq Composite Index fell about 0.30 percenteach.

Among the sector indexes, the NYSE Arca Airline Index lost 5.50 percent and the Dow Jones Transportation Average declined 2.65 percent, while the Philadelphia Oil Service Index and the Philadelphia Housing Sector Index lost over 1 percent each. On the other hand, the NYSE Arca Gold Bugs Index rallied 6.37 percent, the Philadelphia Semiconductor Index added 2.40 percent and the S&P Retail Index rose 1.19 percent.

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