For a second day running, US markets had a strong finish after having traded lower during the day thanks to Germany’s rejection of Greece’s bailout plan, missed earnings at Wal-Mart Stores Inc (NYSE:WMT) and falling Oil prices dragging the shares of energy companies lower.
The Nasdaq 100 sketched out a small gain on Thursday led by gains in online travel companies Priceline and Trip Advisor and Expedia after the former reported strong earnings. The record-breaking earnings at Apple Inc (NASDAQ:AAPL) has kept the stock near its record highs and has helped the Nasdaq close higher in the last seven trading days.
More dovish tones from the Fed has clearly added renewed vigour to the US markets but a massive rally in major indices will be difficult while Greece still poses an immediate threat to the stability of the Eurozone, a major trading partner.
Despite bad news in Greece and Ukraine, US stocks appear to be itching to break higher with a mixed open expected on Friday; an agreement reached over Greece in today’s meeting may just be the catalyst needed to do so.
Deere & Company (NYSE:DE) reports earnings on Friday. The company is another bellwether for US and world growth, much like Caterpillar. Last quarter Deere’s earnings surprised to the upside but guided lower for the full year of 2015 which doesn’t bode well for the upcoming results.
Grain prices have been falling alongside oil prices; this reduces farming income and farmer’s ability to invest in the machinery produced by Deere. Deere is expected to have cut back production in the last quarter in expectations of reduced demand which could result in lower revenues and reduced margins thanks to higher per unit fixed costs.
Shares currently sit around $92 at the top end of the $80-$95 trading range that has been in place since the beginning of 2013. If the trading range holds, there is better risk-reward to the downside. Alternatively, given the strong upside surprise in last quarter’s earnings and the weakened expectations for this quarter, there is some scope for another surprise earnings beat.
Futures suggest the:
S&P 500 will open unchanged at 2,097 with the
Dow 30 expected to open 7 points lower at 17,978 and the
Nasdaq 100 5 points higher at 4,416.
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