Stocks Plunge with Dow Off Triple Digits

The Gilmer Free Press

U.S. stocks plunged on Wednesday, closing more than 1% lower as investors weighed the impact of the strong dollar on the economy and the coming earnings season.

February’s durable goods orders posted a decline, rather than the modest expected increase, under pressure from the strong dollar and weak global demand.

The iShares Nasdaq Biotechnology ETF (IBB), which is up more than 12% for the year, closed down more than 4%, dragging the Nasdaq Composite down 2.37%.

The Dow Jones industrial average extended losses to close down about 290 points as all the major indices declined, giving back gains from the rally after last week’s Fed announcement.

Many traders were also rearranging portfolios ahead of earnings season, which begins in April.

The Dow Jones Industrial Average closed down 292.60 points, or 1.62%, at 17,718.54, with Chevron and Exxon Mobil the only advancers and Microsoft the greatest laggard.

The S&P 500 closed down 30.45 points, or 1.46%, at 2,061.05, with information technology leading all ten sectors except energy lower.

The Nasdaq closed down 118.21 points, or 2.37%, at 4,876.52.

The U.S. dollar fell about ½% lower against major world currencies but still held onto gains of more than 7% year-to-date. The continued strength in the dollar have resulted in very low to slightly negative expectations for first-quarter results in April. Last earnings season, many companies already blamed the strong dollar for weaker performance.

“Investors are trying to get their earnings estimates closer to reality and that’s causing some damage here,“ said Maris Ogg, president at Tower Bridge Advisors.

Previously, negative economic data tended to send equities higher as investors saw the news as indications the Fed would not raise interest rate hikes soon.

Low “interest rates certainly help but at the end of the day we need earnings and revenues to grow,“ Ablin said.

Analysts also noted some concern over fighting in Yemen, which borders Saudi Arabia.

It’s “manifesting itself overall in strengthening gold and a bounce in crude,“ said Art Hogan, chief market strategist at Wunderlich Securities. He pointed to 2,070 as a key technical level on the S&P 500 to watch in the close.

Gold futures settled up $5.60 at $1,197.00 an ounce on the New York Mercantile Exchange.

Crude oil inventories showed a gain of 8.17 million barrels last week, more than expected. Crude oil futures settled up $1.70, or 3.58% at $49.21 a barrel.

Firming oil prices boosted energy stocks, which led gains in the S&P 500 and the Dow Jones industrial average.

The Dow transports closed down more than 2% with JetBlue falling more than 4% as all the transports declined.

Futures pointed to a higher open and stocks initially traded mildly higher before giving back gains in morning trade.

The U.S. 10-year Treasury yield gained to Wednesday to 1.92% after trading near 1.86% earlier.

U.S. stocks closed lower on Tuesday, with the Dow off 104 points and bond yields lower as investors piled into the safe-haven trade.

Weekly mortgage applications for the week ended March 20 rose 9.5% from the previous week to the highest level since January, the Mortgage Bankers Association said on Wednesday.

In the continuing post-Fed statement remarks by central bank officials, Chicago Fed President Charles Evans said early on Wednesday that policymakers need to be “confident” that inflation is heading towards 2% before raising rates. Otherwise, there is “no compelling reason” to hike interest rates, he said.

Kraft Foods surged more than 35% to a high on news that the firm will merge with Heinz to form Kraft Heinz, with Heinz shareholders owning 51% of the combined company and Kraft shareholders owning 49%. Kraft shareholders will also receive a special dividend of $16.50 per share.

Facebook kicked off its annual developer conference, with CEO Mark Zuckerberg among the speakers. The conference will run for two days instead of one for the first time.

The Consumer Products Safety Commission confirmed it is investigating the safety concerns raised about the Lumber Liquidators’ flooring products in a recent “60 Minutes” segment.

European equities finished sharply lower as technology weighed and the euro strengthened on Wednesday, despite better-than-expected data from Germany.

Greece risks running out of cash by April 20 unless it secures fresh aid, a source familiar with the matter told Reuters on Tuesday, leaving it little time to convince skeptical creditors it is committed to economic reform.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 15.

For every seven decliners, three shares advanced on the New York Stock Exchange, with an exchange volume of 791 million and a composite volume of nearly 3.5 billion in the close.

G-Fin™: Another Choppy Day for Stocks as Durable Goods Decline

The Gilmer Free Press

Glenville, WV—Markets lost their bottom shortly after midday Wednesday, March 25, 2015 in volatile trading amid uncertainty over the Federal Reserve‘s rate plans. The Nasdaq was particularly hard hit with biotech companies and chipmakers sinking the tech-heavy index.

The S&P 500 dropped 0.7%, the Dow Jones Industrial Average fell 0.9%, and the Nasdaq slid 1.4%.

“It’s jitters as to the Fed rate hikes and kind of the divergence in central bank policy ... This year we’re going to see more volatility than we’ve seen in the last three or four years,“ said Luis Gonzalez, managing director of Snowden Lane Partners, in a call.

Benchmark indexes have whipsawed from near-record highs and back into the red over the past week since the Fed removed its “patient” language from its policy statement and reiterated data dependence.  

“If you were to shut your eyes on Jan. 1 and open your eyes and look at your statement on Dec. 31, I think you’ll see that the markets were positive but you’re going to see some big swings through the course of the year,“ Gonzalez added.

Among the worst-performing semiconductor stocks, Advanced Micro Devices (AMD) plummeted 6.8%, Nvidia (NVDA) sank 5.1% and Micron Technology (MU) fell 4.1, while the iShares PHLX Semiconductor ETF (SOXX) tanked 3.4%.

In biotech, Alexion (ALXN) declined 2.3%, Ariad (ARIA) fell 2.1% and NewLink Genetics (NLNK) tumbled 6.2%, while the iShares NASDAQ Biotechnology Index ETF (IBB) slid 2.6%. 

Durable goods orders in the U.S. unexpectedly slipped 1.4% to $231.3 billion in February, an unexpected drop compared to estimates of a 0.4% increase. In January, durable goods increased 2%.

“The tone of this report was weak, and it adds to a wide array of economic indicators have been pointing to a softening in domestic growth momentum,“ said TD Securities’ Millan Mulraine. “We continue to highlight the downside risks to our Q1 GDP growth forecast of 1.5% q/q, with the risks that growth could slow to a crawl as the recovery appears to have gotten stuck in another weather-induced soft patch.“

Oil prices were holding onto slight gains despite weekly crude oil inventories coming in higher than expected. West Texas Intermediate crude was up 1.4% to $48.15 a share. U.S. crude inventories added 8.2 million barrels over the week ended March 20, higher than an estimated 5.1-million-barrel increase. 

Kraft (KRFT) shares were keeping markets active on Wednesday after the company announced plans to merge with privately held Heinz to create Kraft Heinz Co. Kraft shares surged more than 39%.

Heinz, owned by private-equity firm 3G Capital and Warren Buffett’s Berkshire Hathaway (BRK.A), will hold a 51% stake in the new company. The combined companies will form the third-largest food and beverage company in North America.

In more deals news, computer imaging company Lexmark (LXK) agreed to buy software developer Kofax (KFX) for about $1 billion, or $11 a share. Lexmark shares popped 7.8% and Kofax rocketed 45.8% higher.

There is more uncertainty for Europe on reports Greece will run out of money by April 20, according to Reuters. The unofficial deadline puts even more pressure on Greek Prime Minister Alexis Tsipras to resolve discussions with European Union creditors sooner rather than later. This week Tsipras met with German Chancellor Angela Merkel and agreed to present a comprehensive list of reforms by Monday.

Separately, German business confidence hit its highest level since July 2014, according to the Ifo Institute’s indicator of business climate. The measure rose to 107.9 in March, its fifth straight increase and above economists’ estimates of 107.3.

Pharmaceuticals company Merck (MRK) added nearly 1% after boosting its buyback authorization to $11.7 billion from $10 billion. Last year, the company returned $13 billion to its shareholders.

G-Fin™ Jobless Rates Up in West Virginia

The Gilmer Free Press

Unemployment rates increased in all of West Virginia’s 55 counties in February.

The West Virginia’s seasonally adjusted unemployment increased two-tenths of a point to 7.6%.

The U.S. unemployment rate was down to 5.5% in February from 5.7% in January.

The February 2014 unemployment rate for West Virginia was 8.1%.

Calhoun County had the highest non-seasonally-adjusted unemployment rate at 14.8%, followed by McDowell County at 14.4%.

Jefferson County, in the state’s Eastern Panhandle, had the lowest unemployment rate at 5%, followed by Monongalia at 5.1%.

Employment in goods-producing industries was down from 105,200 workers in January to 103,600 workers.


The Gilmer Free Press

CHARLESTON, WV - Governor Earl Ray Tomblin has signed House Bill 2016, the budget bill for Fiscal Year 2016, with targeted cuts.

In January, Governor Tomblin presented the Legislature with a responsible, balanced budget that took into account the tough budget year.

“As a longtime legislator and former Finance Committee chairman, I respect the hard work legislators put into the budget and the difficult choices they face when choosing how to allocate state dollars to best serve all West Virginians,“ Governor Tomblin said. “West Virginia has a reputation of being one of the most fiscally responsible states in the country. We’ve worked hard to earn that distinction, and I remain committed to finding ways to reduce government expenditures and minimize use of the Rainy Day Fund.“

Governor Tomblin adjusted 46 line items representing a total of nearly $11 million from the FY 2016 budget, which includes a $14.8 million withdrawal from the Rainy Day Fund.

“Our six-year projections show we will again have surpluses in the coming years,“ Governor Tomblin said. “That additional revenue, which will become available as we pay off long-term liabilities such as the old workers’ compensation fund debt, can be used to provide extra funding in several critical areas. But those funding increases cannot occur if we increase the baseline budget in 2016. I am committed to maintaining fiscally responsible policies now and into the future.“

The total general revenue budget for FY 2016 is $4.296 billion.

To read the budget letter in its entirety, Click H E R E.

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