With expectations for poor earnings reports in the first quarter as a result of a stronger U.S. dollar (USD), all eyes are on the financial sector including the Bank of America Corp. Of the ten sectors that make up the S&P 500 index (SPX), analysts forecast that the financial and health care sectors will perform the best in terms of year-over-year earnings. Despite this, the SPX is unlikely to be pulled out of the expected earnings decline due to the huge drop in the energy sector. With expectations that profits in the financial sector will rise by 8.2 percent in the 1st-quarter, all eyes are now on the Bank of America. Analysts have also said that if you take the Bank of America out of the picture, profits in the financial sector are only likely to improve by 0.8 percent. Based on this, Bank of America is expected to report first quarter earnings of $21.65 billion in revenue on 29 cents a share. This would be up compared to last year when the bank reported a $6 billion loss in a legal charge on 5 cents a share loss. Interestingly, 70% of the 23 earnings reported already have cited the stronger greenback as negative. In the first quarter of 2015, the U.S. Dollar Index has gained 9 percent.
U.S. stocks are on the upside again and they finished higher on Friday with the main benchmark indices booking gains for the 2nd straight week. This gain was also boosted by a surge in the share price of General Electric Co., up 11 percent, after it was announced that the company is planning to sell over $30 billion of real estate as part of its restructuring plan. As a result of this advance, the Dow Jones Industrial Average (DJIA) was pushed above the 18,000 level for the 1st time in almost three weeks. On Friday, the DJIA closed up 0.6%, or 98.92 points, at 18,057.65. For the week, the blue chip index gained 1.7%. Meanwhile, the Nasdaq Composite index (COMP) rose 0.4%, or 21.41 points, to 4,995.98. This tech heavy index recorded a gain of 2.2 percent for the week and it is also only less than a percentage point away from the 5,000 level. Also, the S&P 500 index (SPX) was on the upside climbing 0.5%, or 10.88 points, at 2,102.05. The benchmark index recorded a gain of 1.7% over the week which was boosted by a 3% gain in the energy sector and industrials stocks.
In quiet trading on Friday, the U.S. dollar (USD) traded higher. This came in response to investor expectations that the Federal Reserve is likely to increase interest rates by June this year which supported the greenback. On Wednesday last week, William Dudley, the New York Federal Reserve President, stated that the rate hike timing will be dependent on economic data and he also confirmed that if the labor market continued to recover, a rate hike could be likely to occur in June. The EUR/USD traded at 1.0612, down 0.43 percent while the GBP/USD traded at 1.4646, down 0.42%. Against the Australian dollar and the yen, the greenback traded mixed with AUD/USD down 0.16% at 0.7680 and with USD/JPY down 0.31 percent and trading at 120.20. Also, the U.S. dollar index was at 99.46, up 0.21 percent.
Monday saw crude oil prices rising in Asian trading. This increase came despite disappointing trade data from China that showed a narrower trade surplus as well as a sharp decline in exports. In their report, China showed that exports in March declined 14.6 percent. This missed expectations for a 12.0% year-on-year gain. Also declining were imports which dropped 12.3%, missing expectations for a decline of 11.7%. The trade balance surplus in March was reported at $3.08 billion. Crude oil for May delivery traded at $51.86 a barrel, up 0.42%, on the NYMEX. Meanwhile, on Friday, Brent crude for delivery in May traded at $57.87 a barrel, up 2.3%, on the ICE Futures Exchange in London.