While you were sleeping: Wall Street is mixed

Friday 20th February 2015

Wall Street seesawed, pushing the Standard & Poor’s 500 Index to a record earlier in the session amid optimism about a financing deal for Greece before Germany rejected the nation’s request for an extension of loan facilities but kept alive optimism a compromise will be reached.

“Markets are reacting to any news coming out of Greece within a relatively small range,” Michael Woischneck, who helps manage about US$7.1 billion at Lampe Asset Management in Dusseldorf, Germany, told Bloomberg. “It’s likely that all sides have the best intentions to reach an agreement, but they are not finding enough common ground quite yet.”

The Stoxx Europe 600 Index finished the day with a 0.3 percent increase from the previous close. The FTSE 100 Index slipped 0.1 percent. Germany’s DAX rose 0.4 percent, while France’s CAC 40 Index climbed 0.7 percent.

Greece’s Athens Stock Exchange General Index advanced 1.1 percent.

In afternoon trading on Wall Street, the Dow Jones Industrial Average fell 0.25 percent, while the Standard & Poor’s 500 Index slipped 0.15 percent. The Nasdaq Composite Index rose 0.30 percent. Earlier in the day, the S&P 500 climbed to a record high 2,102.13.

Declines in shares of Wal-Mart and those of American Express, down 2.7 percent and 2.5 percent respectively, led the Dow lower.

Shares of Wal-Mart fell as the company downgraded its annual forecast because of planned pay raises for half a million workers, while a strong US dollar weighed on international revenue.

"Like many other global companies, we faced significant headwinds from currency exchange rate fluctuations," Doug McMillon, Wal-Mart Stores CEO, said in a statement.

"Today, we announced comprehensive changes to our hiring, training, compensation and scheduling programs, as well as to our store management structure. These changes will give our US associates the opportunity to earn higher pay and advance in their careers," said McMillon, adding that the investment in these initiatives was more than US$1 billion for this fiscal year.

Analysts said the pay raise would add value in the longer term.

“It’s the right thing to do to reinvest in labour to drive better customer service,” Brian Yarbrough, an analyst at Edward Jones in St. Louis, told Bloomberg. “In the interim, there’s lower guidance. It will impact profitability in 2015.”

Shares of Priceline jumped, last up 8.1 percent, after the online travel agent reported fourth-quarter earnings that exceeded expectations.

The latest US data underpinned optimism about the US jobs markets. Jobless claims declined 21,000 to 283,000 in the week ended February 14.

“The jobs market has its pedal to the metal," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters. “We have crossed the dividing line where there are more signs of labour shortages now than there is an excess supply of discouraged workers pounding the pavement.”

Separately, the Conference Board’s index of leading economic indicators gained a less-than-expected 0.2 percent in January, while the Philadelphia Federal Reserve Bank’s business activity index unexpectedly fell to 5.2 this month, the lowest since February 2014, down from 6.3 in January.

Meanwhile, oil slid, with crude 3.5 percent weaker, amid renewed concern about excess supply. That also weighed on energy shares.

"There's still a lot of supply, even though we're looking at a decline in rig counts and expenditures," Clem Miller, portfolio manager at Wilmington International Funds in Baltimore, Maryland, told Reuters. “Right now, the majority view is that oil won't really start to go up until the middle of the year.”

BusinessDesk.co.nz

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