The enhanced possibility of the Federal Reserve hiking interest rates later in the year after a set of dovish FOMC minutes helped US stock markets pull off the lows on Wednesday. Nevertheless, losses in the energy sector dragged the major indices just into the red as oil prices slid.
Exxon Mobil (NYSE:XOM) Corporation (NYSE:XOM) (NYSE:XOM) was the biggest loser in the Dow yesterday on the news that Warren Buffet shed Berkshire Hathaway’s entire $3.47bn stake in the company during the fourth quarter. Buffet is famed for his long-term value investing so the move is a negative for prospects of a turnaround in the energy sector.
An extension of the ELA for Greek banks by the ECB has averted crisis in Europe for now but US stocks look like following oil prices lower on Thursday’s open market open ahead of earnings from the world’s largest company by revenue, Wal-Mart Stores.
Asda-owner Wal-Mart Stores Inc (NYSE:WMT) is set to report earnings before today’s market open. Expectations are for a revenue increase but a decline in earnings over a year ago. More importantly, Wal-Mart may report a second rise in US same-store sales which increased for the first time in the third quarter after several quarters of declines.
While national US retail sales numbers have been declining, retailers on the whole have been reporting positive quarterly earnings which has raised the bar for Wal-Mart. Wal-Mart did choose an alternative ‘five day’ approach to Black Friday which could either set it ahead or behind of the competition. Wal-Mart’s press release on Black Friday described the event as “awesome” but foot traffic appears to have been flat to down so it will remain to be seen if online sales made up the difference.
So far it would appear the US consumer is not taking advantage of lower petrol prices. Should Wal-Mart sales come ahead of forecasts that could make a big difference to market expectations for the US consumer and the overall health of the US economy.
After third quarter earnings Wal-Mart shares gained over $10 to make new highs at $90, they are hovering just above $85 now so should earning impress again, $100 could be in sight within the next few weeks.
DirectTV, Discovery Communications, Priceline, T-Mobile US and Nordstrom are among some of the other US companies reporting earnings on Thursday.
Futures suggest the:
S&P 500 will open 4 points lower at 2,095 with the
Dow Jones expected to open 25 points lower at 18,004 and the
Nasdaq 100 4 points lower at 4,386.
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