Markets were mixed today as tech and growth stock earnings reports failed to bring joy. The NASDAQ fell hard while the Dow held steady. At the close the Dow gained 21 points on light volume to finish at 18,003. The tech heavy NASDAQ fell 39 points to 4,906 on heavy volume. We seem to have a parting of the ways!
Concern for the economic health of China is on the rise. Bloomberg reported that so far in April, local Chinese bond issuers have canceled over $12 billion worth of bond sales after seven firms missed bond payments and now face default. This figure already totals more than all bond defaults in 2015 and is spooking investors and pushing bond prices in China down thereby causing yields to rise. Analysts are also cutting profit forecasts for companies listed on the Shanghai Composite Index as pressure builds on the central gubment to avoid a hard landing or in this case…..running into a great wall.
Last night there was a flurry of earnings reports and for the most part they could have been better. Starbucks posted a 9% revenue rise and an 18% net income gain. The gurus liked the profit number but said the revenue figure was on the low end due to a decline in the global traffic growth rates. Microsoft reported a 6% drop in revenue and flat profits. The analyst were disappointed with the results however because the all-important cloud segment did not grow as fast as expected. Alphabet (aka Google…. to us old folks) also reported a 17% rise in revenue and a 16% rise in profits but the numbers missed estimates sending shares lower. It was like coming home and being hit on the head with a fry pan because your paycheck was not big enough. Last but not least, McDonald’s reported solid numbers and thrilled analysts as the results of the all-day 24/7 breakfast continue to drive sales and margins. Investors love the Egg McMuffin.
Gold fell $15 an ounce to $1,234 as the US dollar gained ground against the euro and yen. WTI crude oil also was up a point to $43.70 as investors see the global supply glut beginning to ease. Oil has been up for 3 weeks straight and this week alone was up 8%.