global equities

US Stocks Fell Dragged by the Tech Sector

Equity Markets

US stocks ended lower paring modest gains as sentiment faltered towards the end of the trading day, dragged by the tech sector, a significant drop in US Consumer Confidence and the confusion behind easing social distancing measures.

All three US equity benchmarks ended in the red. While the Dow and S&P500 experienced small loses, the tech-heavy index lost almost 1.5%:

  • Dow Jones Average Industrial dropped by 32 points or 0.1% to 24,102.
  • S&P500 lost 15 points or 0.5% to 2,863.
  • Nasdaq Composite erased 122 points or 1.4% to 8,608.

Source: Bloomberg

On the earnings front, Caterpillar, 3M and Pepsi Co were among the key companies reporting earnings before the bell.

Caterpillar announced a decrease in sales and revenue mostly due to lower sales volume.

  • First-quarter sales and revenues decreased by 21%; profit per share declined 39%
  • Company bolsters liquidity, improves a strong financial position
  • Returned about $1.6 billion to shareholders

The Company has also withdrawn its earnings guidance for 2020 due to the uncertainties caused by the pandemic. Its share price ended in positive territory with a slight rise of 0.2% to $115.50 as investors focused on the actions taken by the company to execute profitable growth rather than earnings.

3M quarterly reports show strong growth in certain areas compared to others negatively impacted by the pandemic.

  • Sales of $8.1billion, up 2.7percent year-on-year
  • Organic local-currency sales grew 0.3percent year-on-year
  • Operating cash flow of $1.2billion, up 16 percent year-on-year; adjusted free cash flow of $0.9billion, up 40 percent year-on-year

The company has withdrawn its full-year 2020 guidance. As a provider of personal protective equipment, rising demand for key products like the N95 respirators among others has contributed to keeping revenue growth. However, the company is still engaged in cost-cutting programs to navigate through the challenges of the pandemic. Its share price was up by 2.6% to $157.60.

PepsiCo beats earnings and revenue estimates. The beverage and snack giant saw an increase in demand during the social distancing measures. Its share price is up by 1.4% to $136.30. The company also withdrew its outlook for 2020 but will continue to expect:

  • A core effective tax rate of approximately 21 percent; and
  • Total cash returns to shareholders of approximately $7.5 billion, comprised of dividends of $5.5 billion and share repurchases of $2 billion.

Alphabet, Google’s parent company, issued its quarterly results after the bell. The company reported an increase of 13% in revenue for Q1 2020, compared to a 17% increase for the same quarter a year ago and earnings of $9.87 per share. Based on expectations, it was a miss on earnings. However, overall the company has flared well given the challenges and the company is cautiously optimistic for the second-quarter. In after-hours, the company share price rose by almost 10%

Currency Markets

In the FX space, major currencies were firmer against the US dollar. A series of dismal US economic data weighed on the haven currency.

  • Trade deficit rose to $64.22B in March from previous $59.89B.
  • Consumer Confidence Index significantly dropped from 118.8 to 86.9 in April which is below the estimates of 87.9.
  • Richmond Fed Manufacturing Index contracted deeply to -53 points.

The Antipodeans remain among the best performing G10 currencies against the greenback. Among its peers, Australia and New Zealand have the least amount of cases and deaths and may be are in a position to loosen lockdown restrictions quicker.

The Aussie dollar is trading just below the 0.65 level ahead of the CPI figures which is scheduled to be released later today.

As of writing, the New Zealand dollar is slightly buoyed at 0.6060 level lifted by upbeat trade data:

  • Goods exports rose $215M (3.8 percent) to $5.8B.
  • Goods imports rose $369M (7.7 percent) to $5.1B.
  • The monthly trade balance was a surplus of $672M.

Oil Market

In the oil market, the weekly API crude oil stock report provided some relief to falling crude oil prices. The reports show a build of 9.978M compared to 13.226M easing fears of storage concerns to keep inventories.

As of writing, WTI and Brent crude is currently trading in the vicinity of $7.70 and $20, respectively.

USOUSD and UKOUSD (Daily Chart)

Source: Bloomberg


In a risk-off and risk-on environment, gold struggled to find a firm direction. As of writing, the pair is trading above the $1,700 level, backed by uncertainties and a weaker US dollar.

Key Economic Events
  • ANZ – Roy Morgan Consumer Confidence, Trade Balance, Exports, Participation Rate, and Unemployment Rate (New Zealand)
  • Consumer Price Index (Australia)
  • Harmonised Index of Consumer Prices (Germany)
  • Core PCE, GDP, Pending Home Sales, EIA Crude Oil Stocks Change, Fed Interest Rate Decision and FOMC Press Conference (US)

Upcoming Earnings Report

Reporting Time
Teleconference/ Webcast Time
Facebook, Inc. (NASDAQ: FB)
Wednesday 29 April, after market close
Conference call 5:00 PM (ET)
Microsoft Corporation (NASDAQ: MSFT)
Wednesday 29 April, in the morning
Live webcast 5:30 PM (ET)
Tesla Inc (NASDAQ: TSLA)
Wednesday 29 April, after market close
Live webcast at 6:30 PM (ET)
Boeing Co (NYSE: BA)
Wednesday 29 April, in the morning
Conference call 10:30 AM (ET)
General Electric Company (NYSE: GE)
Withdrawn due to uncertainty
Conference call at 8:00 AM (ET)
CME Group Inc. (NASDAQ: CME)
Wednesday 29 April, before market open
Conference call at 8:30 AM (ET)

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