For the last two trading sessions, we have seen U.S. stocks rally but Wednesday put a halt to this rally and saw U.S. stocks rebounding. This decline came in response to news late in the day which stated that the European Central Bank (ECB) is rejecting Greek bonds as collateral. Alexis Tsipras, the new Greek Prime Minister, as well as Yanis Varoufakis, the Greek finance minister, have been trying to renegotiate the terms of the bailout but it seems the ECB is not willing to be accommodating yet. At the close of U.S. trading and after moving between small gains and losses, the Nasdaq Composite index (COMP) dropped 0.2%, or 11 points, to 4,716.70. Also on the downside was the S&P 500 index (SPX) which fell 0.4%, or 8.52 points, to 2,041.51. This benchmark index plunged during the first fifteen minutes of the trading session with utilities, health-care and energy stocks leading the losses. Breaking the downward trend was the Dow Jones Industrial Average (DJIA) which advanced 6 points to 17,673.02. The biggest gainer on the Dow was the Walt Disney Company whose shares surged 7.6 percent, helping to keep the index in the green.
On Wednesday, the U.S. dollar (USD) traded higher against most major currencies. This came in response to positive data out of the U.S. which showed service sector activity had grown at a much faster rate than expected in January. Despite this, the future of Greece in the euro zone negatively impacted investor sentiment. In their report, the Institute of Supply Management said its non-manufacturing purchasing manager's index (PMI) increased from 56.2 in December to 56.7 in January. This beat analyst expectations for a reading of 56.3 in January. Meanwhile, ADP, the payroll processing firm, reported that non-farm private employment rose by 213,000 last month. This was below expectations for an increase of 225,000. In December, the U.S. economy created 253,000 jobs. Meanwhile, the EUR/USD traded at 1.1422, down 0.49%, after reports showed that the European Central Bank is not willing to back the Greek government’s plans to renegotiate the country’s €140 billion bailout. In other currency news, the greenback traded lower against the British pound and the Japanese yen with GBP/USD trading 1.5232, up 0.43 percent while USD/JPY traded at 117.45, down 0.12 percent.
On Thursday, the shares of Sony Corp (T:6758) surged and hit their daily trade limit. This came after the Japanese consumer electronics and entertainment group stated that their net loss for the year would be smaller than originally forecast - the company expects to lose $1.4 billion (170 billion yen) in its fiscal year to March which is a lot less than the expected 230 billion yen. Sony also projected operating profits at 20 billion yen which was way above the 40 billion yen loss estimated in October. Boosting Sony’s 3rd-quarter results, with the company’s net profit tripling, were a weaker yen (JPY) as well as an increase in the company’s PlayStation console and smartphone businesses. Sales of image sensors for cameras for vehicles and smartphones also contributed to the positive sales results. Despite the positive data, Sony did warn of more job cuts by March 2016 of 2,100 employees, specifically in its mobile communications segment. As a result of the forecasts, the shares of Sony traded up 14.7% at 3,174 yen on the Tokyo Stock Exchange on Thursday.
In Asian trading on Thursday, crude oil prices rebounded. This came after the Bank of China announced that they had reduced the amount of deposits banks need to hold as reserves from 20.0 percent to 19.5 percent. The move was to boost economic activity and lending while investors bet that this move would increase demand for the commodity. Crude oil for March delivery traded at $48.90 a barrel, up 0.60 percent, on the NYMEX. Meanwhile, on Wednesday, the Energy Information Administration in the U.S reported that crude oil inventories rose in the week ended January 30 by 6.3 million barrels. This was higher than expectations for an increase of only 3.5 million barrels. Also, Brent oil for delivery in March dropped 3.93 percent, or $2.27, to trade at $55.64 a barrel on the ICE Futures Exchange in London on Wednesday.