Stocks higher; oil, dollar eyed ahead of earnings

U.S. stocks traded higher on Tuesday as investors eyed weaker oil prices and renewed dollar strength ahead of the unofficial beginning of earnings season on Wednesday.

“It’s a very light day today in terms of economic news,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “The market is going to buy some time today (with) some pressure from commodities—that’s mostly profit taking.”

Crude oil traded about 1 percent lower at $51.42 a barrel after settling up more than 6 percent on Monday. Overnight, oil slumped on a report from Goldman Sachs that said prices needed to remain low for months to achieve a slowdown in U.S. output growth.

The U.S. dollar traded nearly 1 percent higher as the euro fell to $1.08. The U.S. 10-year Treasury yield held higher near 1.92 percent.

“Today is a little bit of a day where crude oil and the dollar is what the market is going to focus on,” said JJ Kinahan, chief strategist at TD Ameritrade. As “bond (yields) continue to move higher you may see people sell stock.”

Read More Crude oil, US dollar could drive stocks

He added that trade today and Wednesday morning will likely be slow as investors await Wednesday afternoon’s release of the Federal Open Market Committee’s meeting minutes.

Kinahan is looking at the minutes to show “where’s the division and what the Fed members were pushing for.”

Alcoa reports after the bell on Wednesday in the unofficial start to the earnings season.

Low oil and the strong dollar are expected to continue weighing on corporate profits.

“Everybody’s holding their breath to see what earnings look like,” said Lance Roberts, general partner at STA Wealth Management. “I think there’s a lot of real concern now about the strength of earnings.”

The Job Openings and Labor Turnover Survey (JOLTS) showed there were 5.1 million job openings on the last business day of February, little changed from the prior month, the U.S. Bureau of Labor Statistics reported on Tuesday.

The number of quits and hires were about the same in February as they were in January.

“Bottom line, the demand for labor in February was pretty good,” Peter Boockvar, chief market analyst at The Lindsey Group said in a note, “but because the supply of labor has been more limited relative to this, we’re seeing a continued drop in the unemployment rate.”

The only other economic report due is consumer credit at 3:00 p.m.

The monthly non-farm payrolls report for March significantly missed expectations on Friday, but traders mostly digested the data as partly seasonal and another weak indicator that could delay an interest rate hike.

While analysts expected a better monthly report based on declining weekly jobless claims, STA’s Roberts said a reduction in first-time unemployment claims does not necessarily point to increased hiring or wage growth.

Firms will reach a point at which they have consolidated their workforce and aren’t letting employees go, he said. “When I post a job opening that doesn’t mean I’m hiring. I’m being very selective.”

He added that the employment ratio for the 16 to 64 age group declined last month.

U.S. stocks closed higher on Monday, rebounding from initial losses on the disappointing jobs report Friday as it and other weak economic data gave investors renewed hopes of a delayed increase in rates.

“It just shows how sensitive the market is right now to expectations of Fed policy. The Fed wants to send the message it will be very careful how it proceeds from here,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. “The Fed has a clear signal to investors it will not… snuff out the recovery.”

Greece remains an issue as the government leaders sought reparations from Germany for damages during the Nazi occupation of World War II. Greek Prime Minister Alexis Tsipras is also scheduled to meet with Russian leaders on Wednesday.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17960.67 79.82 0.45%
S&P 500 S&P 500 Index 2087.60 6.98 0.34%
NASDAQ Nasdaq Composite Index 4944.99 27.67 0.56%

The Dow Jones Industrial Average opened up 57 points, or 0.33 percent, at 17,940, with UnitedHealth leading advancers and American Express the greatest laggard.

The S&P 500 opened up 6 points, or 0.27 percent, at 2,086, with health care leading eight sectors higher and utilities and energy the only laggards.

The Nasdaq opened up 20 points, or 0.41 percent, at 4,937.

Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 49 million and a composite volume of 144 million in the open.

Crude oil futures fell 73 cents, or 1.40 percent, to $51.41 a barrel on the New York Mercantile Exchange. Gold futures fell $6.90, or 0.57 percent, to $1,211.70 an ounce in the open.

Earnings expected on Tuesday include Dave & Buster’s after the bell.

FedEx will buy Europe’s TNT Express for $4.8 billion, pending regulatory approval. That approval was not forthcoming two years ago when FedEx competitor UPS tried to buy TNT but was rebuffed by competition officials.

Starbucks will expand its college tuition assistance program to cover the total cost of an online bachelor’s degree.

Intel will change its financial reporting structure, effective on the presentation of its fiscal first quarter results on April 14. The changes reflect the combination of the chip maker’s PC Client Group and Mobile and Communications Group to form its new Client and Computing Group.

Viacom announced a realignment that will result in a new structure, job cuts, and a $785 million pre-tax charge for the second quarter.

Read More Early movers: JPM, FDX, INFA, VIAB, GM, SBUX & more

European equities were higher on Tuesday with fears over an impending rate hike in the U.S. receding and investors cheering acquisition news in the courier delivery sector.

—CNBC’s Peter Schacknow contributed to this report.

On tap this week:

Tuesday

Earnings: Dave and Buster’s

1:00 p.m.: $24 billion 3-year note auction

3:00 p.m.: Consumer credit

Wednesday

Earnings: Alcoa, Family Dollar, Rite Aid, Bed Bath and Beyond, Pier 1 Imports, Global Payments, RPM International

8:00 a.m.: Fed Gov. Jerome Powell on challenges for monetary policy

10:00 a.m.: New York Fed’s Dudley on economy

1:00 p.m.: $21 billion 10-year note auction

2:00 p.m.: FOMC minutes

Thursday

Earnings: Walgreen Boots Alliance, Constellation Brands, Ruby Tuesday, PriceSmart

8:30 a.m.: Initial claims

10:00 a.m.: Wholesale trade

1:00 p.m.: $13 billion 30-year auction

Friday

8:30 a.m.: Import prices

8:45 a.m.: Richmond Fed President Jeffrey Lacker on economic outlook

12:20 p.m.: Minneapolis Fed’s Kocherlakota

2:00 p.m.: Federal budget

This entry was posted in Markets, Stocks. Bookmark the permalink.

Leave a Reply