Indexes turn higher on Wall Street, erasing early losses

26 April, 2018, 12:49 | Author: Kathy Ellis
  • Screen Shot 2018 04 24

Wall Street dropped sharply on Tuesday as warnings by bellwether companies of higher costs reverberated as the benchmark US 10-year Treasury yield pierced the 3 percent level for the first time in four years. The stock dropped 5.6 percent to $145.38.

The Russell 2000 of smaller company stocks fell 2 points, or 0.2 percent, to 1,550. Wall Street had cheered Caterpillar's results earlier in the day after the company had a strong first quarter and raised its forecasts for the year.

The companies' statements came as interest rates kept rising, which makes it more expensive for companies to borrow money.

The rising yield reflects higher expectations for inflation and economic growth. Specifically, futures on the blue-chip index are trading above fair value this morning, thanks to a positive earnings reaction for Boeing (BA) - though pre-market upside is modest as the 10-year Treasury yield holds above the key 3% level.

The 10-year yield traded at 2.43 percent at the beginning of the year. Google's parent company benefited from strong digital ad sales as well as an accounting change.

So far, 24 percent of S&P 500 companies have reported first-quarter results, with 77.1 percent coming in above the Street consensus, versus the 64 percent average since 1994.

The Nasdaq is down 138.77 points, or 1.9 percent.

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Caterpillar fell 0.6 percent, down for the second day after its management noted first-quarter earnings would be the "high water mark" for the year and warned of higher material costs.

Comcast Corporation (NASDAQ:CMCSA) was slightly off the pace in screen-based trading, shedding 2% at US$32.70, despite topping expectations with its first quarter earning.

CURRENCIES: The dollar inched up to 108.86 yen from 108.84 yen. The euro rose to $1.2244 from $1.2205.

Facebook which is set to report after market closes on Wednesday, was down 1.55 percent. Brent crude, used to price global oils, fell 1.1 percent to $73.86 per barrel in London. Heating oil dipped 0.6 percent to $2.13 a gallon. Silver climbed 0.7 percent to $16.70 an ounce. The maker of Maytag and KitchenAid products rose 5.5 percent to $158.58.

One of the stocks leading the index higher was travel website Travelzoo (NASDAQ:TZOO) which surged nearly 21% to US$9.35 after first-quarter income from continuing operations nearly tripled to US$2.5mln. The Nasdaq increased 34 points, or 0.5 percent, to 7,162.

Japan's benchmark Nikkei 225 index climbed 0.5 percent to 22,315.79 and South Korea's Kospi jumped 1.3 percent to 2,481.70 after Samsung reported better than expected earnings.

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