Amazon Stocks Rally On Upbeat Profits
All eyes were on the Federal Reserve meeting yesterday and at the close of U.S. trading, U.S. stocks ended the volatile trading session lower. This decline came in response to comments by the Fed that it would continue to be ‘patient’ before raising interest rates sometime during the second half of 2015. Added to this was a renewed fall in oil prices which also sent materials and energy stocks sharply lower while disappointing economic data and earnings also pushed the markets lower. The Dow Jones Industrial Average (DJIA) dropped 1.1%, or 195.84 points, to 17,191.37. Most of the index’s components ended lower while Boeing Co (BA, +5.40%) was the top gainer, while Microsoft (MSFT, -3.45%) and Chevron (CVX, -4.20%) were the poorest performers on the index. Also on the downside was the S&P 500 index (SPX) which closed down 1.4%, or 27.39 points, at 2,002.23. All ten of the index’s sectors finished in the red and the energy sector declined 3.9 percent as oil fell to its lowest levels since March 2009. Meanwhile, the Nasdaq Composite index (COMP) fell 0.9%, or 43.50 points, to 4,637.99 and the big gain by Apple (AAPL) was not able to keep the index in the green.
With the Federal Reserve’s comments that they would remain patient on tightening monetary policy, the U.S. dollar (USD) remained broadly higher against other major currencies on Wednesday. The EUR/USD traded at 1.1327, down 0.46 percent. This came as sentiment on the euro remained vulnerable due to the election victory by the anti-austerity Syriza party in Greece on Sunday. Investors are concerned that Greece will leave the eurozone as Syriza pledges to renegotiate the terms of the country’s €240 billion international bailout. Against the British pound, the greenback traded unchanged with GBP/USD at 1.5182, while against the Japanese yen, the USD held steady at 117.75. The Australian dollar traded higher against the U.S. dollar with AUD/USD trading at 0.7956, up 0.25% after the Australian Bureau of Statistics reported that consumer price inflation increased by 0.2 percent in the last quarter. This was below the expected gain of 0.3 percent.
On Wednesday, the shares of Facebook (FB, +0.61%) declined to $74.74, down 2 percent, despite reporting fourth-quarter earnings that topped Wall Street estimates. The Internet social network giant reported that their revenue grew 49% in the fourth quarter with growth in mobile advertising helping to beat Wall Street's targets for sales and earnings. Revenue was at $3.85 billion which beat expectations of $3.78 billion. Despite this, the revenue growth reported was the weakest since the beginning of 2013 and Facebook’s spending has also increased. The company also reported net income of 25 cents a share, or $701 million, compared with 20 cents a share, or $523 million, a year-earlier. Excluding one-time items, Facebook said that it earned 54 cents which beat analysts’ expectation for 48 cents. According to FB, the company reached 1.19 billion in mobile monthly active users during the quarter. This marked an increase of 26 percent over last year. Revenue from mobile advertising made up almost 69% of the total advertising revenue for the fourth quarter, increasing from a total of 53 percent on ad sales a year ago. Meanwhile, total advertising revenue increased to $3.59 billion, up 53 percent during the quarter.
In Asian trading on Thursday, crude oil prices made a slight rebound as investors focused on demand prospects in the U.S. economy. Crude oil for March delivery traded at $44.54 a barrel, up 0.20 percent on the NYMEX. Meanwhile, West Texas Intermediate oil futures remained under pressure overnight on Tuesday after the U.S. Federal Reserve stated that they would remain patient regarding interest rate hikes while also stating that the U.S. economy was expanding ‘at a solid pace’. According to the weekly report of the Energy Information Administration in the U.S., crude oil inventories increased by 8.9 million barrels in the week ended 23 January. This exceeded expectations for an increase of 4.1 million barrels. Meanwhile, Brent oil for delivery in March traded at $49.13 a barrel, down 0.96 percent, on the ICE Futures Exchange in London.