Wall Street turns lower as weak domestic data spoiled moods

Summary:

• Votes in Congress over border security bill to be held later today

• S&P 500 (US500) pulls back after failing to break above the 200-session moving average

• Coca-Cola (KO.US) sinks as earnings highlight diminishing brand loyalty

Major stock market indices from Wall Street launched today’s trading lower following a downbeat retail sales report for December. Dow Jones (US30) is taking the biggest hit while Nasdaq surprisingly proves to be the most resistant (US100). Real estate and IT are among leading sectors while financials and consumer staples underperform the most.

US500 (S&P 500 futures underlying) failed to break above the 200-session moving average (purple line on the chart above) earlier this week. From the technical point of view, one may see that a pullback may be looming. However, given the scale of US500 rally since the beginning of the year any corrections could be named a “healthy” one. Source: xStation5

No breakthrough was offered to investors when it comes to the trade wars theme today. Meeting of the US negotiators team with the Chinese President Xi Jinping was confirmed and it will be held on Friday. Apart from that, negotiators are said to be still far apart on key issues underlying ongoing trade conflict - reform of the Chinese economy and theft of intellectual property. Nevertheless, an idea of extending tariff deadline of 1 March for another 60 days can be seen as an optimistic sign. More details can be found here.

No breakthrough was offered when it comes to the border security either. However, the situation may change today as the US House of Representatives is set to vote on the newest border security bill today at 11:30 pm GMT. Word on the street is that in case Congress approves the bill then the US President, Donald Trump, will reluctantly sign it and look for Wall funding elsewhere.

Marathon Oil (MRO.US) is surging almost 10% today on the back of well received earnings report. Source: xStation5

Company News

American International Group (AIG.US) is the worst performing S&P 500 company today. The US insurer published earnings report for the fourth quarter of 2018 yesterday after session close. AIG managed to generate revenue of $12.56 billion, 5.1% higher than median estimate. However, things do not look as rosy when we take a look at earnings. Unexpectedly, insurer reported second consecutive quarter of loss providing an EPS of -0.63 USD. Brian Duperreault, AIG’s CEO, said that insurer’s problems turn out to be bigger and deeper than previously estimated but company put “right strategies” in place and is on track to see turnaround progress in 2019.

On the other side of the quotation board we have Marathon Oil (MRO.US). The US oil company also reported earnings for the final quarter of the previous year yesterday. Unlike AIG, Marathon managed to show solid revenue and EPS. Revenue came in at $1.765 billion, 24.4% above median estimate, while EPS reach $0.15 (expected: $0.147). Moreover, the company committed to uphold its dividend policy and announced share buybacks.

Coca-Cola (KO.US) was the only Dow Jones company scheduled to report earnings today. Beverage company generated $7.057 billion of revenue, slightly below the median estimate of $7.071 billion. EPS came in inline with expectations at $0.43. The company experienced slowing soda drink sales and diminishing brand loyalty of its consumers. As dark clouds gather around company’s core business one should not be surprised that Coca-Cola is the worst performing Dow stock today.

Nasdaq (US100) continues to struggle within the resistance zone ranging above the 7000 pts handle. The benchmark painted a pin bar candlestick yesterday suggesting that a reversal may be just around the corner. Nevertheless, a bigger sell-off would require a solid trigger. Source: xStation5