US stocks open narrowly higher; earnings, dollar 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 opened narrowly higher on Friday as investors eyed the start of earnings season and the rising dollar.

“Investors are going to take a wait and see attitude [today] as earnings season starts,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

The corporate earnings outlook for 2015 seems bleak, as first-quarter earnings for the S&P 500 index are expected to come in 4.7 percent lower, while second-quarter earnings are expected to lower 2.1 percent.

While some companies have already reported their quarterly earnings, many analysts believe earnings season will officially begin next week.

“Investors will be looking at company earnings and see what they have to say about the dollar,” said Maris Ogg, president at Tower Bridge Advisors.

The dollar index, which measures the greenback’s performance against a basket of currencies, extended gains on Friday, rising about 0.1 percent. It surged more than 1 percent on Thursday. It is also on pace for its first weekly gain in a month.

“Everyone’s expecting the dollar to hit parity with the euro,” Ogg said, adding that while the stronger dollar will present short-term problems for some companies, “in the long run, a stronger dollar is good for the U.S.”

The euro traded about 0.5 percent lower, near $1.06.

Investors are also keeping an eye on General Electric, as its shares rose more than six percent in pre-market trading after the company announced a major restructuring of GE Capital, including the sale of most of the unit’s assets, and will institute a $50 billion stock buyback program with proceeds from the move.

“This is something they’ve been discussing since the financial crisis,” said Randy Frederick, managing director of active trading derivatives at Charles Schwab. “I think it just took them this long to find a buyer.”

GE’s stock traded over its 30-day average volume of 34.7 million, reaching 42.5 million.

Another company investors will be eyeing is Apple, as it began taking pre-orders of its smartwatch on Friday. “From my observation, the stock goes up as the launch for a new product approaches,” Frederick said.

Nevertheless, it will be “hard to beat Apple’s last generation of phones,” Ogg said. “The watch today is not a big factor, but let’s face it, this is just the opening salvo.”

In corporate news:

Netflix—Citi upgraded Netflix to “buy” from “neutral,” saying it doesn’t share competition concerns that are currently reflected in the stock’s price.

General Motors—Citi added the automaker’s stock to its Citi Focus List, saying a recent pullback makes for an even more attractive entry point and that it retains the optimism reflected in a January analyst report.

Gap—The apparel retailer reported a two-percent rise in comparable store sales for March, above the 0.6-percent consensus estimate. The results were entirely driven by a 14-percent gain by Gap’s Old Navy chain, while the Gap and Banana Republic brands saw declines.

On the economic data front, U.S. home prices for the month of March fell 0.3 percent, in line with analysts’ expectations.

Also, Richmond Fed President Jeffrey Lacker, who has long called for a prompt tightening of monetary policy, repeated his views that consumer spending, the labor market and other economic conditions have improved significantly over the last year.

“Unless incoming economic reports diverge substantially from projections, the case for raising rates will remain strong at the June meeting,” Lacker said in prepared remarks for a Global Interdepedence Center event here.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17951.69
-7.04 -0.04%
S&P 500 S&P 500 Index 2092.14
0.96 0.05%
NASDAQ Nasdaq Composite Index 4970.10
-4.47 -0.09%

The Dow JonesIndustrial Average opened 15 points up, or 0.1 percent, led by General Electric and Merck the greatest laggard.

The S&P 500 kicked off Friday’s session rising 3 points, or 0.2 percent, at 2,094, with Industrials leading seven advnacers and Information Technology lagging.

The Nasdaq opened 3 points higher, or 0.1 percent at 4,977.

The CBOE VolatilityIndex (VIX), widely considered the best gauge offear in the market, traded near 13.

U.S. crude rose 16 cents to $50.95 a barrel on the New York Mercantile Exchange.

Advancers led decliners nine to 4 on the New York Stock Exchange with an exchange volume of 72 million and a composite volume of 249 million.

—CNBC’s Peter Schacknow and Reuters contributed to this report.

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