Stocks trade higher; earnings, Fed eyed

Brendan McDermid | Reuters Traders work on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

U.S. stocks traded higher after opening near the flatline on Thursday as investors digested earnings reports and looked for more signals on the timing of an interest rate hike.

“The key for the short-term direction lies with the earnings next week,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “The Fed is just another excuse for the market to find direction.”

Markets traded choppily on Wednesday after the release of minutes from the Federal Open Market Committee’s March meeting, which showed policymakers were divided over the timing of a rate hike.

“When you dissect the rest of the statement…you’ve got a split which on balance (puts) us back to when (Fed Chair) Janet Yellen told us on the 27th it’s going to be gradual and data dependent,” said Art Hogan, chief market strategist at Wunderlich Securities.

Jobless claims came in at 281,000, slightly above lowered expectations, but an increase from last week.

Peter Boockvar, chief market analyst at The Lindsey Group, pointed out in a note that the four-week average on initial jobless claims fell to the lowest level since 2000.

“Bottom line, near 15-year lows in both initial claims and continuing claims is a clear sign that employers are holding on to their employees to a great extent and another sign of a tightening labor market,” he said.

The overall trend in employment data indicates that March’s disappointing nonfarm payrolls report was a one-time miss, Hogan said.

The U.S.10-year Treasury note yield edged higher to 1.91 percent, while the 2-year Treasury note yield gained to 0.55 percent. The U.S dollar traded about half a percent higher against major world currencies, with the euro lower near $1.07.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17935.54
33.03 0.18%
S&P 500 S&P 500 Index 2085.90
4.00 0.19%
NASDAQ Nasdaq Composite Index 4967.44
16.62 0.34%

Wholesale trade data comes at 10:00 a.m. ET.

Costco reported a 2-percent drop in March comparable store sales, a slightly larger decrease than the consensus forecast of a 1.2-percent decline.

On the earnings front, Alcoa, the former Dow component, reported adjusted quarterly profit of 28 cents per share, 2 cents above estimates, though revenue was below analyst forecasts. CEO Klaus Kleinfeld said Alcoa’s growth compared to a year earlier was due entirely from new businesses.

The beat on earnings per share but miss on revenue “probably is going to be the theme of earnings season,” Cardillo said. “A lot of that is due to the stronger dollar. Investors are watching big names next week.”

JPMorgan Chase and Intel post earnings early next week as quarterly reports get underway.

Walgreens Boots Alliance reported adjusted quarterly profit of $1.18 per share, beating estimates of 95 cents. Revenue, however, was below Street forecasts. The company revealed plans to close about 200 U.S. stores, and put other streamlining measures into place that will save $1.5 billion annually by the end of 2017.

Constellation Brands reported adjusted quarterly profit of $1.03 per share, 9 cents above estimates, with revenue essentially in line. The company also initiated a quarterly dividend of 31 cents per share.

PriceSmart and Ruby Tuesday are due to report after the bell.

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European equities were higher in morning trade on Thursday, resuming a recent rally, as investors reacted to fresh economic data.

The Dow Jones Industrial Average opened up 12 points, or 0.07 percent, at 17,913, with JPMorgan Chase leading gains and Intel the greatest laggard.

The S&P 500 opened up 1.25 points, or 0.06 percent, at 2,082, with health care the greatest of eight advancing sectors and utilities and telecommunications the only laggards.

The Nasdaq opened up 8 points, or 0.17 percent, at 4,959.

Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 47 million and a composite volume of 118 million in the open.

Crude oil futures gained 94 cents to $51.37 a barrel on the New York Mercantile Exchange. Gold futures fell $3.80 to $1,199.30 an ounce in the open.

CNBC’s Peter Schacknow contributed to this report.

On tap this week:

Thursday

Earnings: Ruby Tuesday, PriceSmart

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

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