Before the much anticipated Federal Reserve meeting later this week, on Monday US stocks drifted into negative territory with the Nasdaq Composite and S&P 500 moving back from records set last Friday.
Both the Nasdaq Composite index (COMP) and the S&P 500 index (SPX) declined from the records set on Friday, while Monday saw US stocks slowly drifting towards negative territory.
The Nasdaq Composite index dropped 0.6% or 31.84 points to 5,060.25 while the S&P 500 declined 0.4% or 8.76 points to 2,108.93. In afternoon trade, the Dow Jones Industrial Average (DJIA) also moved down and traded 0.2%, or 42.17 points, lower at 18,037.97.
An Edward Jones investment strategist, Kate Warne, said that investors felt relieved as many feared that earnings would be worse. However, based on the Fed’s meeting scheduled later this week, the markets remain somewhat cautious. Warne further said that the performance of the stock markets during the current earnings season is about lowered expectations being beat by the reported numbers. Warne also added that there is less concern about Greece, while ECB’s (European Central Bank) quantitative easing combined with more positive economic news are underpinning stock prices.
Meanwhile, investors remain positive about earnings results such as from the world’s biggest companies in terms of market capitalization as Apple Inc. posted an outstanding 33 percent rise in earnings. Added to this, the tech giant raised its dividend and Apple shares rallied 2.16 percent in after-hours trade.
A chief market strategist from IG, Chris Weston said in a note that judging by last week’s moves in the technology giant, the market trusts that the 8 consecutive quarterly earnings beat will still continue. As a result, we can probably expect a fairly large increase to the previously announced buyback.
MT4 Chart: S&P 500
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