The stock markets in the United States declined after experiencing four consecutive days of rebound. Today, the markets were negative impacted by lower-than-expected corporate earnings.
Yesterday, the European Central Bank (ECB) expanded its quantitative easing (QE) to €60 billion per month until 2016. According to Benoit Coeur, member of the ECB Executive Board, policy makers are ready to extend the central bank’s asset purchasing program beyond September 2016 if necessary based on the inflation outlook in the region.
ECB President Mario Draghi stated that the central bank is planning to purchase securities of public and private companies worth as much as €1.14 trillion. The central bank was forced to increase its stimulus to an almost stagnant economy and the risk deflation.
In an interview with Bloomberg, Kevin Caron of Stifel Nicolaus and Co. commented, “The bigger picture is that we had a pretty sizable move in the market the day before. “The market is still assessing the recent actions by the ECB, trying to figure out how much of that action was already priced into markets going into the meeting and what it might mean for markets going forward.”
On the other hand, Matt Maley of Miller, Tabak & Co LLC opined that the ECB is still the “forefront the next few trading days.” According to him, people are still digesting the announcement of the central bank. He added that investors will also become more focused on earnings. “It was a nice rally yesterday, but we’ve had a lot of one-day rallies that didn’t really pan out,” said Maley.
According to Bloomberg, 77% of the companies in the S&P 500 that already reported quarterly earnings that exceeded the expectations after analysts lowered their estimates.
- Dow Jones Industrial Average (DJIA) – 17,672.22 (-0.80%)
- S&P 500- 2,051.44 (-0.57%)
- NASDAQ- 4,755.60 (+0.11%)
- Russell 2000- 1,190.25 (+0.01%)
- EURO STOXX 50 Price EUR- 3,382.55 (+1.80%)
- FTSE 100 Index- 6,832.83 (+0.53%)
- Deutsche Borse AG German Stock Index DAX- 10,649.58 (+2.05%)
- Nikkei 225- 17,511.75 (+1.05%)
- Hong Kong Hang Seng Index- 24,850.45 (+1.34%)
- Shanghai Shenzhen CSI 300 Index- 3,571.73 (+0.12%)
Stocks in Focus
The stock price of Starbucks Corporation increased 7% to $88.50 per share. The world largest coffee chain reported consolidated net revenues of $4.8 billion, an increase of 13% for the first quarter of fiscal 2015. The company said its global comparable store sales rose 5% due to a 2% increase in traffic. Its non-GAAP EPS climbed 16% to $0.80 per share.
Valero Energy Corporation gained almost 5% to $50.16 per share after its board of directors approved a 45% increase in its regular quarterly cash dividend to $0.40 per share.
The shares of United Parcel Service dropped almost 10% to $102.93 per share. The company released its estimated preliminary financial results for the fourth quarter showing that its earnings will be lower than its previous expectations. The company is now expecting to generate earnings of approximately $1.25 per diluted share. UPS CEO David Abney said, “Clearly, our financial performance during the quarter was disappointing.”