US stocks luke warm: Morning market insights

The New York Stock Exchange rose on Friday night (Australian time), completing a gain for the week. Good earnings results outweighed a lukewarm report on first-quarter economic growth and the US government reported that first-quarter gross domestic product rose at an annual rate of 2.2%.

“While the economy continued to grow in the first quarter the expansion remains modest in pace and subpar from a historical perspective,” Jim Baird, chief investment strategist for Plante Moran Financial Advisors, told CNN Money.

The Federal Deposit Insurance Corporation said five more US bank failures brought the number to 22 this year. The two largest were Plantation Federal Bank of Pawleys Island, South Carolina and Inter Savings Bank of Maple Grove, Minnesota, each with nearly $500 million in deposits.

The S&P500 Index rose 0.24% to 1403.36 on Friday night (Australian time) and the Dow Jones Industrial Average was up 0.18% or 23.69 points to 13228.30.

The NASDAQ Index gained 0.61% or 18.59 points to 3069.20.

As of Thursday last week 300 US companies in the S&P 500 had reported earnings and 70% of them bettered estimates according to Capital IQ. On Friday night (Australian time) the best performers were Expedia and Amazon.

Amazon.com (AMZN:US) rose 15% to $226.85 after its first quarter results beat expectations, easing concerns about its expansion. The online retailer earned $130 million or 28 cents per share for the quarter ending March 31.

Expedia (EXPE:US) gained 23% to $40.31 after the travel booking website reported strong earnings.

Ford Motor (F:US) fell 2.36% to $11.59 after it reported a 45% plunge in quarterly profit, mainly because of losses in Europe.

“The world isn’t ending,” Jack Ablin, chief investment officer at Harris Private Bank told CNN Money.

“The market is trading at distrust discount and increased confidence should allow stock prices to move higher even if earnings don’t.”

West Texas Intermediate (WTI) oil price fell 0.10% to $US104.82 a barrel overnight, gold was flat with no change to be trading at $US1664.80 an ounce and the Australian dollar was buying $US1.0458 at 8.15am AEST.

Europe

European share markets gained over the weekend after good earnings outweighed disappointing economic data and political uncertainty in France, Greece and the Netherlands.

Those three countries have elections coming up – France and Greece on May 6 – and in spite of those polls national benchmark stock market indexes rose in 12 of 18 western European markets.

The London FTSE 100 closed up 0.49% to 5777.11, the German DAX was up 0.91% or 61.42 points to 6801.32 and the European Stoxx50 index gained 0.92% to 2344.02.

German carmakers gained over the weekend. Volkswagen rose 13% after the world’s second-largest carmaker reported first-quarter profits beating analysts’ estimates due to higher earnings from Audi. Operating profit rose 10%.

Porsche gained 10%. Daimler, maker of Mercedes-Benz cars, gained 2.1% as it reported an increase in first-quarter profit.

French tyre maker Michelin increased 9.2% after reporting a 5.1% rise in first-quarter revenue on higher demand for specialty tyres for earthmovers, aircraft and agricultural vehicles.

“Equity investors are relying on supportive earnings and valuation considerations to offset top-down challenges that have intensified,” Ian Williams, a London-based strategist at Peel Hunt, wrote in a note to clients according to Bloomberg.

“The euro zone’s economic weaknesses are prompting a political backlash, the US recovery is losing pace and the UK is back in recession,” he said.

On Friday night (Australian time), the Spanish government reported that first quarter unemployment rose to 24.4%.