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US stocks traded lower on Monday as investors analyzed the results of Goldman Sachs Group Inc. and Citigroup Inc., which could provide further insights into the state of the banking sector and the economy as a whole.
How are the benchmarks?
The Dow Jones Industrial Average
DJIA, -0.27%
down 41 points to 26,372, a loss of about 0.2%, while the S & P 500 futures contracts
SPX, -0.29%
ticks 4 points at 2,903, a loss of 0.1%. The Nasdaq Composite Index
COMP -0.47%
fell 16 points, or 0.2%, to 7,967.
What motivates the market?
The season of results is in full swing, although the week is shortened by the Easter holidays, with the following results: Goldman Sachs
GS -3.12%
and Citigroup
C -1.08%
On Monday.
Profits at both banks fell sharply from the first quarter of last year, but exceeded analysts' low expectations for quarterly earnings. In terms of revenue, Goldman is below expectations, while Citigroup matched, highlighting the moderate activity of Wall Street transactions and mergers and acquisitions in the first quarter. Shares of Blue chip Goldman fell 2.7% on Monday, weighing heavily on the Dow.
Investors were encouraged by the quarterly results of the Dow component JPMorgan Chase & Co., who launched a new earnings season Friday, which was better than expected, while Wells Fargo & Co. also posted robust online earnings and results.
Analysts expect that the first quarter results of the S & P 500 will suffer the first decline of one year on the other for nearly three years because the hurdles macroeconomic data continue to drive down analysts' estimates.
On Saturday, at a conference of the International Monetary Fund, global financial decision makers said they were ready to "quickly support growth" if necessary. While the economy is expected to continue to expand in 2020, risks remain on the downside due to concerns about trade tensions, policy uncertainty and geopolitical developments.
On the trade front, US Treasury Secretary Steven Mnuchin told reporters this weekend that the US and China are getting closer to a trade deal, with telephone talks between the two countries last week. But he did not know if more face-to-face meetings would be needed. On Sunday, Reuters announced that the United States was easing China's demands for the reduction of industry subsidies, a prerequisite for reaching an agreement after having encountered strong Chinese opposition.
Federal Reserve policy may also be of concern to traders after President Trump reiterated his attacks on the central bank on Sunday. He criticized the rate hikes in the first two years of his administration, as well as the bank's downsizing program, known as the qualitative tightening, which is due to end in September.
Fed President Jerome Powell has repeatedly asserted the central bank's independence from political influence, while pledging to fulfill its four-year mandate until early 2021 .
What stocks are under discussion?
Actions of Advanced Disposal Services Inc.
ADSW, + 18.81%
Waste Management Inc. surged 19.7% after Waste Management Inc.
WM + 1.83%
said he had reached an agreement to buy the rival waste treatment company under a $ 4.9 billion contract. Waste Management will pay $ 33.15 per stock share for the Advanced Disposal stock, a premium of 22.1% over the closing price on Friday.
Shares of a Canadian legal cannabis manufacturer Aphria Inc.
APHA -14.02%
fell 13% on Monday after the Canadian-based cannabis company posted a significant loss in the third quarter last quarter.
Alliance Data Systems Corp.
ADS, -9.64%
inventory fell 8.6%, following the announcement that the French company Publicis Groupe SA
PUB, + 1.61%
would repurchase its Epsilon consumer data unit and, after the ADS shares were downgraded to become more efficient in the market than BMO Capital.
What do analysts say?
The reports on corporate results have given few surprises so far, said Tom Martin, senior portfolio manager at Globalt Investments. "In the absence of new macro or surprising corporate announcements, trading is usually trading flat," he added.
"Despite an ambitious strategy to diversify the bank's revenue streams from its core banking business, such as the launch of Marcus, its online banking service, Goldman's revenue structure remains relatively static, and negotiation still representing 41% of the bank's income. while investment management, which offers strategic growth opportunities, represents only 17%, in line with the results of last year, "writes Axel Pierron, managing director of the consulting firm. management of Opimas financial markets, in an e-mail.
"Expectations for a trade agreement between the United States and China continue to grow, some anticipating an announcement this week … But, remember, the market has already integrated prices into an agreement. The real purpose of any announcement will therefore be the elimination of customs duties, and the sooner the better, "wrote Tom Essaye, chairman of the Sevens Report, in a note sent Monday to customers.
Which economic data and which stakeholders of the Fed are ahead?
Factory production in the state of New York rose in April compared to March, the index of market conditions in the Empire State rising from 10.1 to 3.7%, its lowest level of two years preceding.
Chicago Fed President Charles Evans told CNBC on Monday morning, "I can see that the fund rate is stable and unchanged in the fall of 2020. For me, it's helping to support the prospects for inflation and to ensure its viability. "
Evans will deliver a speech to the New York Association of Business Economists at 1 pm He sits on the Fed's interest rate setting committee.
At 20 hours. Boston Fed President Eric Rosengren, also a voter, was scheduled to deliver a speech at Davidson College in Davidson, Nc.
How are other markets traded?
Asian stock markets closed on a mixed note on Monday, the Shanghai Composite Index
SHCOMP, -0.34%
and the Hong Kong Hang Seng Index
HSI, -0.33%
everyone loses 0.3% the day. Nikkei 225 from Japan
NIK + 1.37%
meanwhile, increased by 1.4%. European markets were up slightly, with the Stoxx Europe 600 up 0.1%.
In commodities markets, crude oil futures
CLK9, -0.89%
fell 0.7%, while the price of gold
GCM9, -0.39%
and the US dollar
DXY, -0.04%
were every lower Monday.
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