U.S. Markets Close Sharply Lower on Geopolitical Uncertainty
U.S. Markets Close Sharply Lower on Geopolitical Uncertainty
Costco Earnings, Housing Data: What to Watch on Wall Street May 27
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U.S. Markets ended Thursday's session lower across the board with the Dow Jones Industrial Average losing more than 160 points. Stocks made a decisive turn lower after a Malaysia Airlines airplane with 295 people aboard crashed in Ukraine near the Russian border. This come after an announcement late Wednesday that the U.S. and European Union would increase sanctions on Russia. Traders sought safe havens in precious metals. Gold and Silver futures climbed. Investors poured money U.S. government bonds, yields on the 10-year bond dropped. But, some stocks did manage to buck the downward trend. Microsoft (MSFT) shares were up after the tech giant announced it would cut 18,000 jobs in the next year. Other gainers included UnitedHealth (UNH) and Abbott Laboratories (ABT). On tap to report Friday are General Electric (GE) and Honeywell (HON). TheStreet's Susannah Lee has the details from New York.
On Wednesday, May 27 we keep an eye on six companies that are scheduled to report their quarterly financial results as well as a couple of economic data to watch on Wall Street. The notable earnings for the day include Michael Kors Holdings Limited (KORS), Tiffany & Co. (TIF), Toll Brothers Inc (TOL), DSW Inc (DSW), Costco Wholesale Corp (COST), and Palo Alto Networks Inc (PANW). In the morning, warehouse superstore Costco is scheduled to release its fiscal third-quarter financial results before the market opens. TheStreet’s Jim Cramer believes Costco may be an opportunity going into the quarter, saying it’s a very strong company that’s been down for quite a long time. Analysts are expecting a continued improvement from a year ago. The consensus estimate calls for a profit of $1.16 cents per share on revenue of around $26 billion for the first quarter, according to Thomson Reuters data. On the economic calendar, we note mortgage applications figures from the Mortgage Bankers' Association to get a feel for housing demand, as well as economic momentum. Also, we keep an eye on the Redbook, a weekly indicator of consumer spending. It measures comparable store sales at chain stores, discounters, and department stores. TheStreet's Kurumi Fukushima reports in New York.
Time Warner Cable (TWC) topped the S&P 500 after Charter Communications (CHTR) agreed to acquire its larger rival for around $55 billion. That marks a 14 percent premium to Time Warner's close on Friday. Investors cheered Charter's decision in which the cable operator would become the second largest in the country after Comcast (CMCSA). Charter was the best performer on the Nasdaq. The Dow saw all 30 of its components in the red, though some suffered more than others. High-momentum mover Apple (AAPL) was the biggest laggard, followed by Chevron (CVX) which had been pulled lower by a sell-off in crude oil.
Stocks plummeted on stronger economic data which exacerbated fears the Federal Reserve will hike interest rates sooner than expected. Consensus is for a September hike. The increasing possibility of a hike pushed investors into safe-haven assets including the U.S. dollar. The greenback surged to an 8-year high against the Yen and a one-month high against a basket of other international currencies. A stronger dollar was hurting commodity prices, pushing West Texas Intermediate down around 2%. Major oilers Exxon (XOM), Chevron (CVX), BP (BP) and Royal Dutch Shell (RDS.A) were lower as a result. New home sales in the U.S. rose more than expected, increasing 6.8% to an adjusted annual rate of 517,000.
In Tuesday's Analysts' Actions, TheStreet highlights upgrades for discount store chain Dollar General (DG), fashion apparel company L Brands (LB), and online auctioning site eBay (EBAY). Both Dollar General and L Brands received the highest rating by analysts at Goldman Sachs. The two companies made it on the firm's CONVICTION BUY list. Dollar General was upgraded to CONVICTION BUY from a BUY rating. The company also had its price target increased by a couple of dollars to $87 from its previous $85. Goldman Sachs analysts cited Dollar General's long-term growth and attractive valuation for the upgrade and positive note. L Brands was also added to Goldman Sachs' CONVICTION BUY list. The fashion company had its rating raised to CONVICTION BUY from BUY. The firm calls the parent company of Victoria's Secret one of the highest quality growth companies in consumer retailing, and increased its price target to $106 from its prior $104. And finally, eBay had its rating raised to BUY from HOLD by analysts at Axiom Capital Tuesday morning. Analysts at the firm gave a $10 boost to its price target to $70 from its prior $60 price objective. TheStreet's Kurumi Fukushima reports in New York.
Durable Goods orders fell a half percent in April matching estimates. Durable Goods have fallen 7 of the last 9 months. The Case-Shiller home price index showed nationally home prices gained 4.1% from March 2014. Charter Communications (CHTR) is merging with Time Warner Cable (TWC) in a deal worth more than $55 billion in cash and stock. The acquisition by Charter would vault the cable operator into the ranks of the biggest U.S. broadband and pay television companies. The combined cable giant would have 23 million total customers, second only to Comcast's (CMCSK) 27 million customers. The offer is valued at about $195 a share, a 14% premium to Time Warner Cable’s last closing price. The deal comes only a month after Time Warner Cable went back on the block after Comcast Corp. terminated the companies’ planned $45.2 billion merger in the face of serious push back from Washington regulators. A Charter-TWC deal could be in for a stringent review in Washington as well. Including debt, the deal is valued at $78.7 billion. The maker of Similac Advance baby formula says it will begin selling the first mainstream formula without genetically modified ingredients. Abbot Labs (ABT) says it will be available by the end of the month at Target (TGT). Most mainstream baby formula is made with various corn and soybean products, which are often grown with genetically modified seeds. Also joining the healthier, fresher food movement is Taco Bell. Yum Brands (YUM) Taco Bell chain committed itself to removing all artificial flavors and colors from its foods by the end of the year. Taco Bell also said it would remove additives like added trans fats and hopes to remove additional artificial preservatives and additives by the end of 2017. The moves impact more than 95% of its core food items, according to the company.
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