Markets closed lower on Monday following a slump in the shares of Goldman Sachs and Citigroup. The two major banks' shares declined despite posting earnings beats due to weak quarterly revenues. This led to broad-based losses for the markets and the three major benchmarks ended in the negative territory.
The Dow Jones Industrial Average (DJI) decreased 0.1%, to close at 26,384.77. The S&P 500 decreased almost 0.1% to close at 2,905.58. The tech-laden Nasdaq Composite Index closed at 7,976.01, losing 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 1.2% to close at 12.15. Decliners outnumbered advancers on the NYSE by a 1.37-to-1 ratio. On Nasdaq, a 1.95-to-1 ratio favored declining issues.
How Did the Benchmarks Perform?
The Dow dipped 27.5 points to close in the red. Losses for the 30-stock index were triggered by a 3.8% fall in shares of Goldman Sachs GS , its worst one-day drop since Dec 21, 2018. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Goldman Sachs' first-quarter 2019 results recorded a positive earnings surprise of 20.5%. The company reported earnings per share of $5.71, comfortably beating the Zacks Consensus Estimate of $4.74. However, its net revenues were down 13% year over year to $8.8 billion in the quarter under review. In addition, the revenue figure lagged the Zacks Consensus Estimate of $9 billion. ( Read More )
Meanwhile, Citigroup C delivered a positive earnings surprise of 5.1% in first-quarter 2019, backed by expense control. Earnings per share of $1.87 for the quarter outpaced the Zacks Consensus Estimate of $1.78.
However, revenues were down 2% year over year to $18.6 billion in the first quarter due to a 20% fall at its equity trading division. Following this development, shares of the company declined 0.1% and weighed on the broader markets.
The S&P 500 fell 1.8 points to end in the red. Of the 11 major sectors of the S&P 500, eight ended in negative territory, with financials and real estate shares leading the laggards. The Financial Select Sector SPDR Fund (XLF) and Real Estate Select Sector SPDR Fund (XLRE) decreased 0.6% each on Monday. Meanwhile, the Nasdaq decreased 8.2 points to close in negative territory.
Mnuchin Says U.S. & China Move Closer to a Trade Deal
U.S. Treasury Secretary Steven Mnuchin informed reporters over the weekend that the United State and China are inching closer toward signing an official trade deal. He added that such developments happened over phone discussions between the two countries last week. But Mnuchin was unsure if any more face-to-face meetings would take place.
Meanwhile, Reuters reported on Apr 14 that U.S. trade negotiators had "watered down demands" that China should cut industrial subsidies as one of the main conditions for a trade deal to happen. This meant that U.S. negotiators are keen on sealing a trade deal even if it means moderating some of their initial demands.
Powell Remains Positive about the Economy
In an interview with 60 Minutes on Apr 14, Fed Chair Jerome Powell remained upbeat about the state of the U.S. economy. He said that despite dismal retail sales for December and lower than expected job gains, the economy was still healthy. Powell added: "I would say there's no reason why this economy cannot continue to expand."
Powell also insisted that the central bank was free from any political influence, saying that the decision to hold interest rates steady was not because of any pressure whatsoever from the White House.
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