The stock market suffered another decline as the escalation of the conflict in Iraq, caused an increase in the price of oil. Additionally, data from the U.S. Department of Labor showed that the number of people who applied for unemployment benefits climbed last week.
Iraq is the second largest oil-producing member of OPEC (Organization of the Petroleum Exporting Countries). The Islamic State in Iraq and Syria (ISIS) threatens to takeover more cities including Baghdad, the capital of the country. The violence in the northern and central part of Iraq escalated three years after the United States pulled troops out of the country. Many are concerned that the resurgence of violence could lead to a full scale sectarian civil war in Iraq.
According to President Barack Obama, Iraq’s second largest city, Mosul is already controlled by the ISIS. The terrorist group wants to establish an Islamic state across the region. President Obama said his administration has been watching with a lot of concern” and will not rule anything out.”
On the other hand, Iraqi Foreign Minister Hoshyar Zebari said the U.S. government has been cooperative and has a responsibility to be proactive in helping Iraq to combat terrorism. He said, Washington has helped and can help in different ways, including counterintelligence training and supplying equipment and ammunition, but he clarified that nobody called for the introduction of American troops in Iraq.
Commenting on the situation, John Kilduf, a partner at Again Capital LLC, a hedge fund focused in energy told Bloomberg, “This is a major geopolitical event for the oil market.Iraq had been a bright spot ramping up production and now we’re in the midst of a very ugly conflict.”
Meanwhile, the Department of Labor reported that the number of people who applied for unemployment benefits climbed to 317,000 last week, higher than the 310,000 average estimated by economists polled by Bloomberg.
Rob Lutts, chief investment officer at Cabot Money Management opined, “there is some indication that the economy continues to move forward in a fairly measured fashion. He added, “I think this perpetuates the worry that investors have today. What they want is that clear blue sky economic condition, and we don’t have that.”
- Dow Jones Industrial Average (DJIA)- 16,734.19 (-0.65%)
- S&P 500- 1,930.11 (-0.71 %)
- NASDAQ- 4,297.63 (-0.79%)
- Russell 2000- 1,159.43 (-0.62%)
- EURO STOXX 50 Price EUR- 3,284.28 (-0.15%)
- FTSE 100 Index- 6,843.11 (+0.06%)
- Deutsche Borse AG German Stock Index DAX- 9,938.70 (-0.11%)
- Nikkei 225- 14,973.53 (-0.64%)
- Hong Kong Hang Seng Index- 23,175.02 (-0.35%)
- Shanghai Shenzhen CSI 300 Index- 2,153.41 (-0.34%)
Stocks in Focus
The stock price of Lululemon Athletica Inc. (NASDAQ:LULU) dropped nearly 16% to $37.25 per share, after the company reported lower earnings compared a year ago and reduced its guidance for the fiscal year. The yoga pants retailer posted 13 cents in earnings per diluted share on $382.6 million in revenue. During the same period a year ago, the company generated 32 cents EPS. For the full year, Lululemon reduced its earnings and revenue guidance to $1.71 to $1.76 per share and $1.77 billion to $1.82 billion, respectively.
Shares of Keurig Green Mountain Inc (NASDAQ:GMCR) increased more than 4% to $120.75 per share following its statement yesterday that it is committed to returning more cash to shareholders. The company also announced a partnership to bring Keurig single serve brewers to thousands of Subway restaurants in North America.
Restoration Hardware Holdings Inc (NYSE:RH) surged almost 13% to $80.40 a share after the company raised its earnings outlook to as much as $2.24 per share for the fiscal year. The company posted adjusted earnings of $0.18, higher than the $0.11 estimated by Wall Street analysts for the first quarter.