Rover's Weekly Market Brief - 4/15/2016

April 15, 2016 |

Indices

Dow Jones: 17,897.46 (+1.8%)

NASDAQ: 4,938.22 (+1.8%)

S&P 500: 2,080.73 (+1.6%)

Commodities

Gold: 1,232.80 (-0.6%)

Copper: 215.40 (+2.9%)

Crude Oil: 40.35 (+2.1%)

Economy

Retail sales fell sharply in March, decreasing 0.3%. Auto sales declined 2.1% marking the greatest decline in automobile sales in over a year. Restaurant, apparel, and department-store sales were down significantly as well. On a positive note, personal care and building materials had strong increases. However, overall the report presents concerns over the health of the US consumer.

Jobless claims painted a strong picture of the labor market, with initial claims declining 13,000 to 253,000 and continuing claims falling 18,000 to 2,171,000 for the week of April 9th. This week’s reading is the lowest since 1973. The 4-week moving averages for both initial and continuing claims declined 0.6% and 0.5%, respectively. Initial claims are down 8.7% while continuing claims are down 3.4% since January, 2016.

Inflation rose 0.1% in March buoyed by energy, according to the Consumer Price Index for All Urban Consumers (CPI-U). The food index fell 0.2% as six major grocery-store food groups declined while the energy index increased 0.9% led by a 2.2% gasoline increase. The index for all items less food and energy continued its steady climb, rising 0.1% YoY. Overall, the CPI-U has risen 0.9% over the past 12 months.

Markets

Wells Fargo (NYSE: WFC) had a 4.2% rise in revenue but a 6.9% drop in net income for Q1 2016 YoY. Diluted EPS fell 4.8% to $0.99 from $1.04 the same quarter the past year. Interest income grew 8.4% while noninterest income grew 2.3% driven by increasing loan volume and deposits. However, net income decreased as compensation and charge-offs (due to deterioration in the oil and gas portfolio) increased.

JP Morgan's (NYSE: JPM) net revenue and net income fell 3.0% and 6.7%, respectively, for Q1 2016 YoY. Consequently, diluted EPS declined 6.9% to $1.35 from $1.45 YoY. The corporate & investment banking, asset management and corporate divisions of the bank saw the biggest revenue declines which were checked by gains in the commercial banking, and consumer & community banking segments.

CSX (NASDAQ: CSX) posted a 13.5% and a 19.5% decline in revenue and net income, respectively for Q1 2016 YoY. Diluted earnings per share decreased 17.8% to $0.37 from $0.45 the same quarter in the past year. Overall declining shipment volume in merchandise (i.e. agriculture, industrial, housing and construction) and coal precipitated the revenue fall. Higher pricing and lower fuel costs were unable to arrest the revenue decline.

Alcoa (NYSE: AA) reported a 15.0% revenue drop and a 91.8% net income fall Q1 for 2016. Diluted EPS declined 100% to $0.00 from $0.15 the same quarter in the previous year. The revenue and net income drop was driven by a combination of lower aluminum product shipments and lower alumina and metal pricing and exacerbated by rising SGA and interest expenses. Alumina production fell 15.3% while aluminum production fell 7.9%.

Looking Ahead

Upcoming Events:

Tuesday April 19 — Housing Starts (An indicator for the state of the housing market).

Thursday, April 21 — Philadelphia Fed Outlook (A measure of business conditions).

Earnings Calendar:
Monday Tuesday Wednesday Thursday Friday
PepsiCo (PEP) Johnson & Johnson (JNJ) Coca-Cola (KO) Alphabet (GOOGL) General Electric (GE)
IBM (IBM) Philip Morris (PM) Qualcomm (QCOM) Microsoft(MSFT) McDonald's (MCD)

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