Stocks mixed as investors digest trade updates, earnings
Stocks were mixed as investors considered a latest batch of corporate earnings and new updates from U.S. officials pointing to dimmer prospects for a U.S.-China trade resolution.
The S&P 500 (^GSPC) ticked up 0.14%, or 3.63 points, as of market close. The Dow (^DJI) slipped 0.09%, or 22.38 points, while the Nasdaq (^IXIC) rose 0.68%, or 47.69 points.
Equities initially were mixed at the open after Commerce Secretary Wilbur Ross said on CNBC that the U.S. is “miles and miles” from a trade deal from China. The comments appear to diverge from those of White House economic adviser Kevin Hassett, who on Wednesday said in an interview with CNN that “the talks are moving forward” and that he was confident the two countries could reach an agreement by an early March deadline.
Earnings season also continues to be a central focus for investors, with a handful of major names reporting financial results before the bell on Thursday. These included American Airlines (AAL), Southwest Airlines (LUV), Bristol-Myers Squibb (BMY), JetBlue (JBLU), Freeport-McMoran (FCX) and Union Pacific (UNP).
In its quarterly results, Southwest Airlines called out the partial U.S. government shutdown for erasing between $10 million and $15 million from its revenue so far in January, adding to a chorus of complaints from corporate executives over the economic and company-level impacts of the ongoing shutdown. This announcement came following a statement from the CEO of peer airline Delta, which said earlier that the partial government shutdown caused a $25 dent to January revenue.
The U.S. Senate on Thursday blocked two bills aimed at providing funds to end the government shutdown, with a measure backed by Democrats and one backed by Republicans each failing to gain the 60 votes required to advance.
The government shutdown will cost the U.S. economy more than $5.7 billion by the end of this week, according to a report from S&P Global Ratings. That would equal the amount President Donald Trump has requested for his proposed barrier at the southern border. The request has put Congress at an impasse, with congressional Democrats refusing to pass a spending bill that includes funding for the barrier.
Overseas, the European Central Bank on Thursday announced it will keep interest rates at record lows through at least summer 2019. Its main refinancing rate is unchanged at 0% in January, while the deposit and marginal lending facilities rates were also left at -0.4% and 0.25%, respectively. Each was in line with consensus estimates.
The decision comes amid a host of political and economic concerns across the eurozone, with sluggish growth in Germany, turmoil in France over continued “Yellow Vests” protests and budget deficit concerns in Italy. Earlier Thursday, IHS Markit reported that the euro area economy “edged closer to stagnation at the start of 2019,” with businesses posting the weakest increase in output in five-and-a-half years and the first decline in demand in more than four years.
STOCKS: Airlines report quarterly results
American Airlines (AAL) beat Wall Street’s expectations for fourth-quarter earnings, which came in at an adjusted $1.04 per share versus consensus expectations of $1.02 per share. Net income rose 8% to $481 billion, while quarterly revenue came in slightly below expectations at $10.94 billion versus $10.95 billion expected. The airline said it foresees revenue for each seat mile flown to be flat to up 2% for the first quarter of 2019. First quarter EPS is expected to be between $5.50 to $7.50, the company said, with the midpoint of the range ahead of consensus estimates of $5.91 per share.
Southwest Airlines (LUV) reported net income of $654 million for the fourth-quarter of 2018, beating expectations of $603.25 million. Adjusted earnings were $1.17 per share, also exceeding consensus estimates of $1.07 per share. The company expects revenue per available seat mile to rise 4% to 5% in the first quarter of 2019.
JetBlue (JBLU) said it earned $155 million in net income in the fourth quarter of 2018, exceeding expectations of $131.9 per share. Adjusted earnings were 50 cents per share, also ahead of consensus estimates of 43 cents per share. Fourth quarter revenue per available seat mile increased 2.4%, and the company expects RASM growth to be between negative 2% to up 1% for the first quarter of 2019.
Bristol-Myers Squibb (BMY) shares declined after the company said it voluntarily withdrew its FDA application for a use of Optivo for treading advanced lung cancer, a major area for immuno-oncology. Optivo sales also came in weaker than expected, totaling $1.8 billion in the quarter versus Wall Street’s estimates of $1.84 billion as the company loses some market share of Merck & Co.’s cancer medication Keytruda. Bristol-Myers fourth-quarter earnings were 94 cents per share, or 9 cents above estimates, while revenue of $5.97 billion was in-line with estimates.
ECONOMY: Jobless claims fall to a near five-decade low
New unemployment claims in the U.S. fell 13,000 to 199,000 for the week ending January 19, coming in well below consensus estimates of 218,000. This represents the lowest level for initial claims since November 15, 1969, the U.S. Department of Labor reported. Continuing jobless claims also declined more than expected, registering at 1.713 million for the week ending January 12, versus 1.73 million expected and 1.737 million for the week prior.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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