On Friday, the stock market ended the week on a mixed note with the Dow Jones Industrial Average posting a modest gain of 0.3% while the NASDAQ was down 0.6%, spending most of the day trading at a low. For its part, the S&P 500 ended flat, locking in a 0.4% decline for the week to end ahead of the NASDAQ. The Dow Jones Industrial Average advanced 0.32% while the S&P 500 declined 0.03%. The NASDAQ was down 0.62%.
Domestically, traders appeared to show little concern about the possibility of Greece leaving the EU as the focus turned to reaching a deal on Saturday. Greece needs to make a debt payment on June 30th to the International Monetary Fund (IMF). Failing to meet that deadline would put the 'Grexit' talk back on the table.
On Monday, the stock market opened the trading week on a higher note with the Dow and S&P 500 each gaining 0.6% while the NASDAQ outperformed, rising 0.7%. Equity indices spent the entire Monday session up with trader sentiment receiving a boost from reports indicating Greek officials submitted a new proposal to the Eurogroup. However, regional officials did not share the market's optimism with Germany's Finance Minister Wolfgang Schaeuble saying he does not see anything new in the proposal.
The stock market ended the trading session on Wednesday broadly lower with the S&P 500 declining 0.7% and turning negative for the week, down 0.1%. Equity indices began the day with slim losses after the IMF rejected Greece's restructuring proposal, putting the two sides back at square one.
The market registered its second consecutive decline on Thursday with the S&P 500 (down 0.3%) sliding below its 50-day moving average (2,107.00). The benchmark index held a modest gain through the morning, but relative weakness among several influential sectors pulled the S&P 500 into negative territory during afternoon action. Stocks began the day with slim gains, but declined from their opening levels during the initial hour amid reports the Eurogroup meeting was suspended to give the Greek delegation time to submit a better proposal to the creditors.
In U.S. markets, six of ten sectors registered gains, but daylong weakness in the technology sector (down 0.8%) was today's main story and the primary reason for NASDAQ's underperformance. The health care sector declined 0.1%, spending the day near its flat line with hospital names offsetting the weakness in biotechnology.
Similar to the health care sector, the S&P 500 spent the day near its unchanged level. The index benefited from relative strength in just about every sector other than technology. Most notably, financials (up 0.3%), consumer discretionary (up 0.4%), and industrials (up 0.2%) kept the benchmark index little changed throughout the day.
Of the three influential groups, the discretionary sector was underpinned by apparel retailers after Dow component Nike reported better than expected results. The two names gained 4.6% and 4.3%, respectively.
On Friday, economic data was limited to the final reading of the Michigan Sentiment Index for June, which was revised up to 96.1 from a preliminary reading of 94.6 while the Briefing.com consensus expected no change. The June reading was up from 90.7 in May, representing the highest level for the index since hitting 98.1 in January.
On Friday, sports apparel manufacturer Nike released its quarterly earnings – with positive results. Shares of Nike closed up to lead the S&P 500 component on the day. Nike’s shares increased following the release of its better-than-expected, fourth-quarter earnings after the closing bell on Thursday. Nike was the best performing S&P 500 component on the day.
In its latest quarter, the athletic shoe and apparel manufacturer earned 98 cents a share on revenue of $7.78 billion. Analysts on average were expecting the company to earn 83 cents a share on revenue of $7.69 billion for the fourth quarter. In the same quarter a year ago, the company earned 78 cents a share on sales of $7.42 billion.
In addition, Nike reported that as of the end of the quarter, worldwide futures orders scheduled for delivery through November 2015 were up 2% compared to a year ago at $13.5 billion. The sportswear company added that on a currency neutral basis, Nike said the figure was 13% higher.
For the full fiscal year, the company reported a 10% increase in revenues to $30.6 billion. The Fiscal 2015 financial year was an outstanding year for Nike. Representatives of Nike noted that the consistent growth of the company is fueled by the company’s connection to the consumer and Nike’s ability to deliver innovation at an unprecedented pace and scale.
Additionally, on Friday, it was announced that Nike will be opening a new distribution facility, investing $301 million in a 2.8 million-square-foot Memphis distribution center, a project that has taken five years from conception to reality.
The North America Logistics Campus (NALC), as it will be known, represents the largest investment Nike has made outside of its home state. The new facility will allow Nike to distribute footwear, equipment and apparel from one facility for the first time in the company’s history. This will make it easier for athletes to get their Nike products quickly.
Nike will be able to store 45 million units of product at the NALC, which sits on 194 acres of land. It will operate with an estimated 400 employees for each of its four shifts. Those numbers are expected to expand to 650 per shift. It currently employs 912 people full time.
Nike received a 15-year tax abatement that will save the company an estimated $57 million in taxes, while generating $105.3 million in new tax dollars for the city and county.
For the week, Nike’s stock reached a weekly high of $110.24 on Friday after it traded at a weekly low of $104.84 on Thursday.
In the week ahead, traders worldwide will be waiting to see if any deal was made between Greece and European officials over the weekend. If a deal hasn’t been made and Greece is set to default on its repayment to the IMF, this could cause European stocks and indices to decline due to the growth in uncertainty in Europe. For instance, if no deal is made, the German DAX 30 may decline when the markets open on Monday. Additionally, on Tuesday, June 30th consumer confidence figures will be released in the U.S. On Wednesday, July 1st markets will be closed in Canada due to the national holiday, Canada Day. On Thursday, July 2nd a report on the employment situation in the U.S. will be released in addition to weekly U.S. jobless claims. If a statement is made indicating that the employment situation in the U.S. is worsening, this could cause a decline in the value of U.S. indices such as the Dow Jones Industrial Average and S&P 500. On Friday, July 3rd U.S. markets will be closed in honor of Independence Day.
As we head into the final week of the second quarter, there is a mixed level of optimism in the markets. First of all, many traders are watching the situation in the EU closely to predict if a resolution will finally be found with Greece. As the situation continues to drag out, this has created a range of uncertainty in the region. Additionally, we have yet to see any major monetary policy changes in the past quarter – with the U.S. still holding fire on an interest rate hike. As we head into a new quarter, further economic announcements and quarterly earnings releases will be important elements to watch out for.
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