Wall Street Risks Pullback on Geopolitical Concerns

April 18, 2017

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Tuesday following the rally seen in the previous session. Geopolitical concerns may weigh on the markets amid rising tensions with North Korea and uncertainty about the French presidential election.

Traders are also digesting the latest batch of earnings news, including mixed results from financial giants Bank of America (BAC) and Goldman Sachs (GS).

Stocks moved notably higher over the course of the trading session on Monday, regaining some ground following the decline seen last week. The major averages closed firmly in positive territory, snapping a three-session losing streak.

At the close of trading, the major averages were at or near their best levels of the day. The Dow jumped 183.67 points or 0.9 percent to 20,636.92, the Nasdaq advanced 51.64 points or 0.9 percent to 5,856.79 and the S&P 500 climbed 20.06 points or 0.9 percent to 2,349.01.

Bargain hunting contributed to the strength on Wall Street, with traders picking up stocks at reduced levels after the Dow and the S&P 500 ended last Thursday’s trading at their lowest closing levels in two months.

Traders largely shrugged off ongoing geopolitical concerns as well as the release of a batch of disappointing U.S. economic data.

The National Association of Home Builders released a report showing a bigger than expected pullback in homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 68 in April after jumping to 71 in March. Economists had expected the index to edge down to 70.

The bigger than expected decrease by the index came after it reached its highest level since June of 2005 in the previous month.

A separate report released by the New York Federal Reserve showed that the pace of growth in regional manufacturing activity slowed more than expected in April.

While the markets were closed on Friday, the Commerce Department released a report showing a modest drop in retail sales in the month of March.

The report said retail sales dipped by 0.2 percent in March after a revised 0.3 percent decline in February. Economists had expected sales to edge down by 0.1 percent compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a notable decrease in auto sales, retail sales came in unchanged for the second consecutive month. Ex-auto sales had been expected to rise by 0.2 percent.

A separate report from the Labor Department showed an unexpected decrease in consumer prices in the month of March.

Banking stocks showed a substantial move to the upside as the day progressed, driving the Dow Jones Banks Index up by 2 percent. The index rebounded after ending the previous session at its lowest closing level in well over four months.

M&T Bank (MTB) helped to lead the sector higher after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

Considerable strength was also visible among housing stocks, as reflected by the 1.5 percent gain posted by the Philadelphia Housing Sector Index. With the advance, the index reached an eleven-month closing high.

Tobacco, railroad, semiconductor, and internet stocks also saw significant strength on the day, moving higher along with most of the other major sectors.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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