Share

US stocks drop on Greece fears

New York - Large US banks bested earnings expectations this week, but stocks still lost ground due to worries about high equity valuations and the Greek debt crisis.

US stocks looked headed for another week of gains before deep losses Friday pushed the market into the red.

For the week, the Dow Jones Industrial Average fell 231.35 points (1.28%) to 17 826.30.

The broad-based S&P 500 declined 20.88 (0.99%) to 2 081.18, while the tech-rich Nasdaq Composite Index dropped 64.17 (1.28%) to 4 931.81.

Art Hogan, chief market strategist at Wunderlich Securities, said investor sentiment is "cautious," in part because stocks are still so fully valued.

"Sentiment probably gets better at lower" valuations, he said.

Earnings have so far been "better than very low expectations," Hogan said. "Next week, we'll have a much better read of a broader swath of corporate America."

Among the large banks, standouts included JPMorgan Chase, which rode strong gains in investment banking and trading to net income of $5.9bn in the first quarter, an increase of 12.2% from a year ago.

"We have an outstanding franchise which is getting safer and stronger, and is gaining market share over time," said JPMorgan chief executive Jamie Dimon, implicitly rebutting calls from politicians and some financial analysts to break up the largest US bank by assets.

Goldman Sachs also racked up strong results, with profits rising 40% from the 2014 first quarter, to $2.7bn. Bank of America returned to profitability after a loss in the year-ago period, while Wells Fargo's profits edged lower but bested analyst forecasts.

However, Hogan said investors remain jittery about the strong dollar, as evidenced by American Express, which cited the strong greenback as a drag on results.

Investors are also gearing up for painful results from energy companies hit by crashing oil prices, he added.

Earnings from energy companies in the S&P 500 are projected to fall 65.6%, with profits falling 2.6% for the index as a whole, according to S&P Capital IQ.

Some of the week's most important economic data showed improvement in the US, but not by as much as expected.

US retail sales rebounded in March from a three-month slump, rising 0.9%. New construction of homes in the United States rose 2.0% to an annual rate of 926 000 units, missing estimates.

Greece fears return

The week's biggest move in stocks came Friday, with the Dow slumping 1.54% as uncertainty about Greece roiled European markets and dominated the International Monetary Fund and World Bank spring meetings in Washington.

Negotiations between Greece and international creditors will resume Saturday in Brussels on reform requirements Athens needs to meet to receive its last payment of its bailout funds, the European Union said.

Late Friday, US Treasury Secretary Jacob Lew called for parties to reach agreement.

"Not reaching agreement would create immediate hardship for Greece, and uncertainties for Europe and the global economy more broadly," Lew said.

Next week's agenda includes a flood of earnings reports, including from Boeing, Verizon, Lockheed Martin, Caterpillar, Microsoft and Google.

Interest will be especially high in multinationals that sell consumer products. Companies like Coca-Cola, McDonald's, Procter & Gamble and Kimberly-Clark will be scrutinised for signs of a drag from the strong dollar.

Economic reports next week include March data on sales of new and existing-homes and durable goods orders.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you think corruption-accused National Assembly Speaker Nosiviwe Mapisa-Nqakula will survive a motion of no confidence against her?
Please select an option Oops! Something went wrong, please try again later.
Results
No, her days are numbered
42% - 377 votes
Yes, the ANC caucus will protect her
58% - 521 votes
Vote
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
907.85
+1.2%
Palladium
1,012.25
+1.1%
Gold
2,219.28
+1.1%
Silver
24.85
+0.8%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE