AlphaOne Capital Partners founding partner Dan Niles argues investors will have issues if earnings do not rise to meet the increase in market valuation and should be concerned about problems in the repo market.
Stocks opened little changed Wednesday as investors awaited the signing of the historic phase one trade deal between the U.S. and China and earnings season rolled on.
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All three of the major averages hovered near record highs as details of the partial agreement emerged ahead of Wednesday’s signing.
US-CHINA PHASE ONE TRADE DEAL: WHAT BEIJING HAS AGREED TO BUY
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SP500 | S&P 500 | 3289.35 | +6.20 | +0.19% |
| I:DJI | DOW JONES AVERAGES | 29037.76 | +98.09 | +0.34% |
| I:COMP | NASDAQ COMPOSITE INDEX | 9276.459462 | +25.13 | +0.27% |
Bank earnings continued to roll out with Goldman Sachs reporting a 26 percent drop in fourth-quarter profit amid weakness in its investment banking unit and higher operating costs. Meanwhile, Bank of America’s profit outpaced expectations as bond-trading revenue soared 25 percent year over year to $1.8 billion.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GS | GOLDMAN SACHS GROUP INC. | 241.64 | -4.02 | -1.64% |
| BAC | BANK OF AMERICA CORP. | 34.61 | -0.71 | -2.01% |
Investment firm BlackRock beat on both the top and bottom lines as its assets under management surged past $7 trillion.
Elsewhere, on the earnings front, health care provider UnitedHealth reported a better-than-expected profit, but missed on revenue.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BLK | BLACKROCK INC. | 522.07 | +3.75 | +0.72% |
| UNH | UNITEDHEALTH GROUP INCORPORATED | 292.15 | +3.91 | +1.36% |
Target shares were under pressure after the big-box retailer reported holiday sales that fell short of Wall Street estimates and warned that fourth-quarter comparable sales would miss its forecast.
Amazon on Tuesday lifted its ban on third-party sellers using FedEx Ground for shipments, sending shares of the logistics giant higher.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TGT | TARGET CORP. | 118.24 | -7.02 | -5.60% |
| AMZN | AMAZON.COM INC. | 1,872.39 | +2.95 | +0.16% |
| FDX | FEDEX CORPORATION | 161.36 | -0.77 | -0.48% |
Economic data out Wednesday morning showed producer prices rose 0.1 percent year over year in December, according to the Bureau of Labor Statistics. That was below the 0.2 percent gain that economists surveyed by Refinitiv were expecting.
Looking at commodities, gold was up 0.3 percent at $1,549 an ounce and West Texas Intermediate crude oil was little changed near $58.25 a barrel.
U.S. Treasurys gained, lowering the yield on the 10-year note by 2.3 basis points to 1.795 percent.
In Europe, Britain’s FTSE was up 0.2 percent while France’s CAC and Germany’s DAX were both weaker by 0.2 percent.
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Markets were broadly lower across Asia with China’s Shanghai Composite and Japan’s Nikkei both down 0.5 percent and Hong Kong’s Hang Seng off 0.4 percent.
