After a volatile trading session on Friday, U.S. stocks ended with big losses due to a major selloff on Wall Street as investors turned to safe havens such as gold and Treasurys. Adding to the decline was poor gross domestic product (GDP) data and lower-than-expected earnings. The Bureau of Economic Analysis reported that the U.S. GDP rose 2.6 percent in the last quarter of 2014. This was down from a growth rate of 5.0 percent in the 3 months to September as well as from estimates of 3.0%. Meanwhile, a separate report showed that the Chicago purchasing managers' index (PMI) advanced from 58.8 in December to 59.4 in January. Analysts were expecting the index to decline to 57.5 in January. At the close of U.S. trading, the Nasdaq Composite index (COMP) declined 1%, or 48.17 points, at 4,635.24, losing 2.6 percent over the week and 2.1 percent over the month of January. Also on the downside was the S&P 500 index (SPX) which dropped 1.3%, or 26.26 points, at 1,994.99. This index fell 2.8 percent last week and is down 3.1% for the month. Following the downward trend was the Dow Jones Industrial Average (DJIA) which dropped 1.5%, or 251.90 points, to 17,164.95. This blue chip index is down 3.7% for January and down 2.9% over the past week.
On Monday, the Australian dollar (AUD) gained despite January manufacturing data out of China showing contraction. The HSBC January manufacturing PMI came in at 49.7 which was lower than the estimate for 49.8 and the AUD/USD traded up 0.21 percent at 0.7782. Meanwhile, the AI Group manufacturing PMI for January in Australia advanced 2.1 points to 49. Despite this increase, it is still in contraction yet it could impact the central bankâ€™s decision to cut rates from the current record low 2.5 percent. In other currency news, the EUR/USD traded up 0.31 percent at 1.1322, while the USD/JPY traded at 117.54, up 0.03 percent. Last week Friday, the U.S. dollar (USD) traded lower than most major currencies after data showed that the economy in the U.S. grew less than expected in the 4th-quarter. The U.S. dollar index was down 0.17% at 94.89.
Before the market opens on Monday, Exxon Mobil Corp. (XOM, -0.18%) is scheduled to report fourth-quarter earnings. With the rapid decline of the oil price in the last 6 months, many investors will not take the companyâ€™s past performance as a clear indication of earnings. This is because the price of crude oil was trading at more than $70 a barrel during the 4th-quarter as opposed to under $45 a barrel this week. Key issues will be production going forward as well as capital spending plans. Analysts are expecting Exxon to report production of 4.14 million barrels a day on the quarter compared to $4.22 million barrels a day in the fourth quarter of 2013. Until now, Exxon has not reported any layoffs or budget cuts in order to compensate for falling oil prices. Based on this, analysts expect Exxon to report earnings of $1.36 a share compared with $1.91 a share a year ago. In terms of revenue, this energy company is expected to report revenues of $87.43 billion in the quarter, which is 21 percent lower than the $110.86 billion reported a year ago in the fourth quarter. Over the last 12 months, Exxon shares have declined 7.2 percent, with 5.7 percent since the beginning of 2015. Exxon shares are currently trading at $87.42 a share.
Last week, we saw crude oil prices rebound but it looks as if the commodity is back on the decline. On Monday, crude oil prices dropped and this came after unions in the U.S. called a refinery strike while investors cashed in on the gains from last week. On Sunday, the United Steelworkers union called strikes at 9 U.S. refineries. At 0630 GMT, Brent crude oil futures were trading down $1.29 at $51.70 a barrel. Also on the downside were WTI futures which dropped $1.22 a barrel at $1.29.