US open: Stocks mostly down as earnings season approaches
Ahead of the approaching corporate earnings season, US stocks were mostly down on Monday as the Dow backed away from the 20,000 mark amid a rising dollar and lower oil prices.
On Friday the S&P 500 and the Nasdaq had set new record closing highs, while the Dow was just shy of the 20,000 mark following the non-farm payrolls report, but the new week began on the back foot with the Dow Jones Industrial Average falling 0.32% to 19,899.48, the S&P 500 down 0.268% to 2,270.96, and the Nasdaq flat at 5,521.87 at 1450 GMT.
Later this week earnings season gets into swing with results from big banks JP Morgan Chase and Bank of America.
Michael Hewson, chief market analyst at CMC Markets, said investors were mulling over whether further gains in US markets are sustainable in the longer term.
“There is also the fact that we will get to see some important earnings announcements later this week from the main US banks, and if these disappoint we could well see some profit taking start to kick in, particularly given that we’ve seen big gains in this sector in the last six months, with JP Morgan up 37%, Bank of America up 69% and Wells Fargo up 13%, with a good proportion of those gains since 8 November," he said.
“While speculation about fiscal stimulus from the new US administration has undoubtedly pushed the banks higher, the steepening of the yield curve has also helped, though there is now some evidence that this steepening effect has started to soften, which may well help explain some of today’s weakness in financials today.”
With key data and company news back-ending the week, James Hughes at GKFX said it would be a mostly quiet week until Wednesday, when president-elect Donald Trump is scheduled to hold a long-delayed news conference in New York — his first since July.
"The president elect’s press conference this week could be hit or miss with Trump very often grabbing headlines and causing controversy during his rallies and with comments on Twitter," Hughes said.
"This would usually be a non-event for the markets, as political wranglings and press conferences are often ignored by the major markets. However a Donald Trump press conference is not you normal political press conference."
Meanwhile, oil prices retreated after an update from Baker Hughes revealed on Friday the number of rigs drilling for oil in the US was up four in the week to 30 December.
West Texas Intermediate and Brent crude were both down 2.33% to $52.76 and $55.80 per barrel respectively, sending oil companies Chevron and ExxonMobil down as a result.
Gold on Comex gained 0.55% to 1,179.80 per troy ounce.
In currency markets, the dollar was trading up 1.14% against the pound to 0.8233, but fell 0.7% versus the yen to 116.20, and was flat versus the euro to 0.9489.
In corporate news, Merrimack Pharmaceuticals soared after the company said on Sunday that it will sell its oncology assets to France’s Ipsen in a deal worth up to $1.02bn.
Ariad Pharma’ also rocketed after it sold Taked Parma for about $5.2bn, while VCA surged after Mars said it would buy the pet care provider for $9.1bn.
Apple clicked higher as the technology giant celebrates the 10th anniversary of the iPhone.
Later in the day, Boston Fed President Eric Rosengren will speak in Hartford, Connecticut, while Atlanta Fed President Dennis Lockhart will speak in Atlanta.