On Tuesday, the U.S. stock market ended slightly lower. The volatile trading session saw the major indices move by triple-digits and the Dow Jones Industrial Average (DJIA) moved from a gain of 280 points down to a loss at the close of trading. This big shift is a clear indication of a low level of confidence among investors as a result of the declining oil prices which has created the fear of global deflation. The initial gains among the main benchmarks were prompted by better-than-expected earnings from Alcoa as well as hopes that the European Central Bank will provide quantitative easing as soon as their next meeting on the 22nd of January. Also on the downside was the Nasdaq Composite index (COMP, -0.07%) which closed down 0.1%, or 3.21 points, at 4,661.50 while the S&P 500 index (SPX, -0.26%) fell for the 3rd day in a row with the energy and materials sector selling off sharply.
On Tuesday, the euro (EUR) hit another nine-year record low against the U.S. dollar (USD). This decline came in response to investor fears that the ECB (European Central Bank) will announce an aggressive stimulus plan next week in an attempt to restart the lagging economy in the eurozone. Contributing to the declining currency was also the sinking global oil prices as well as the upcoming Greek election. The EUR/USD pair traded at $1.1786, down 0.38%. On Tuesday night, the euro reached its lowest rate since December 2005 when it dropped to $1.1754. In May 2014, the euro hit a high of $1.3996 and since then, the EUR has dropped by 16% against the greenback. Meanwhile on Tuesday, Deutsche Bank revised its forecast for the euro downward. They have predicted that in the next 3 years, the rate will fall to $1.10, $1 and then to 90 cents.
J.P. Morgan Chase & Co. (JPM, +0.02%) is among the companies whose shares are expected to see active trade in Wednesday’s session. As the world's 3rd largest bank by market cap, J.P. Morgan will report their fourth-quarter and full-year results and analysts are broadly positive about these results. That is, JPM is projected to report fourth-quarter earnings of $1.31 a share, up 4% year over year, on flat revenue of $24 billion. Analysts have also speculated that for the full year, earnings will be $5.45 per share, increasing 25% year over year. Meanwhile, full-year revenue is projected to be $97 billion. The stock also has a high analyst 12-month price target of $76 as well as a consensus buy rating. This potentially suggests gains of approximately 30 percent. The lowest price target is currently at 61% which is almost 4 percent higher than the closing price of $58.83 reached on Monday. The shares of J.P. Morgan Chase are currently trading at $58.84 each.
As a result of a sell-off in other commodities, oil prices declined further on Wednesday by more than 1%. This came after this commodity touched its lowest level in nearly 6 years in the previous session. After the World Bank cut its forecasts for global growth, commodities came under pressure with fears of a disappointing economic outlook partnered with an oversupply of oil. As a result, West Texas Intermediate crude for February traded down 52 cents at $45.38 a barrel while Brent for February delivery traded at $46.10 a barrel, down 49 cents. Meanwhile, other commodities also failed to hold on to highs with copper dropping to five year lows and gold sliding off its 12-week high. Copper for March delivery traded at $2.478 a pound, down 4.82% while gold futures for February delivery traded at $1,226.50 a troy ounce on the Comex division of the NYME, down 0.64 percent.