On Tuesday, the biggest decline in the last three weeks was recorded by U.S. stocks. This came in response to disappointing earnings from Caterpillar Inc. and Microsoft Corp. as well as a decline in durable-goods orders which prompted investor fears regarding a deceleration in economic growth. Economists had expected a modest rise in orders for durable goods, but orders fell in December by 3.4 percent while November’s data also was revised downward. According to analysts, this decline will make it far more difficult for the Federal Reserve to raise interest rates this year. At the close of U.S. trading, the S&P 500 index (SPX) declined 1.3 percent, or 27.53 points, to 2,029.56. This decline was prompted by losses in Microsoft and Caterpillar shares. Also on the downside was the Nasdaq Composite index (COMP) which lost 1.9 percent, or 90.27 points, to 4,681.50. Losing as much as 380 points, or 1.7%, the Dow Jones Industrial Average (DJIA) closed at 17,387.21.
In currency trading on Tuesday, the U.S. dollar (USD) continued to trade lower against other major currencies. This came in response to the release of mixed U.S. economic data while investors have now turned their attention to the upcoming policy statement by the Federal Reserve due out on Wednesday. According to the Conference Board, the U.S. consumer confidence index improved to 102.9 in January, an 8-year high and up from 93.1 in December. Also, the Commerce Department in the U.S. reported that new home sales increased in December by 481,000 units, up 11.6 percent. On the downside was data on total U.S. durable goods orders which dropped 3.4 percent last month. This was down compared to analyst expectations of a 0.5% gain. As a result, the greenback traded lower against the euro with EUR/USD up 1.54% and trading at 1.1410. The USD also traded lower against the British pound with GBP/USD trading at 1.5213, up 0.93 percent.
After the release of its quarterly earnings, the shares of Apple (AAPL, -3.50%) surged to $115.13, up 5.5 percent. This came after the tech giant reported revenue and quarterly earnings which far exceeded analysts’ expectations thanks to record iPhone sales. For its fiscal first quarter ended 27 December, Apple posted net income of $18.0 billion, up from $13.1 billion in the same period a year earlier. Meanwhile, revenue also increased from $57.6 billion to $74.6 billion, up 30 percent, while earnings per share also rose 48 percent to $3.06 from a split-adjusted $2.07. These top earnings came as a result of 74.5 million iPhone sales during the quarter. This marks an increase of 46 percent in sales from a year ago. In other stocks news, the shares of Yahoo (YHOO, -2.93%) also stepped into the limelight surging 7.3 percent to trade at $51.50 a share. This advance came after Yahoo announced that they would spin off their Alibaba (BABA, -1.01%) stake into a separate, publicly traded company. Although analysts were expecting fourth-quarter earnings to come in at 29 cents a share, Yahoo reported earnings at 30 cents a share.
In Asian trading on Wednesday, crude oil prices continued on a downward trend as a result of poor U.S. supply data. On Tuesday, the American Petroleum Institute reported that stocks of crude oil had increased by 12.7 million barrels last week while stocks of distillate and gasoline declined by 670,000 barrels and 5 million barrels respectively. Today, investors will watch for stock data released by the U.S. Department of Energy. As a result, crude oil for March delivery traded down 0.51 percent at $45.50 a barrel on the NYMEX. Meanwhile, Brent oil for delivery in March advanced 0.34%, or 17 cents to trade at $48.33 a barrel on the ICE Futures Exchange in London.