US markets recorded another big move higher on Tuesday when the Dow Jones Industrial Average gained over 300 points as US oil prices moved beyond $50 per barrel. Exxon, Chevron and Caterpillar led the gains backed up better than expected fourth-quarter earnings from BP.
In a sign of technical exhaustion, shares are expected to pullback slightly on Wednesday’s open ahead of earnings from GM, service-sector data and crude oil inventories.
Walt Disney Company (NYSE:DIS) delivered another huge earnings-beat on Tuesday thanks to continued success in its motion picture and domestic theme park business. The Avengers movies as well as the animated Frozen movie have been huge hits with massive merchandising power and this momentum is likely to continue with the release of the next episode of Star Wars in December.
Theme park attendance has been sluggish abroad but domestically revenues jumped 9% year-on-year and lower petrol prices and airfares should only encourage consumers to make the trip to Disney World. A sharp rebound on Monday off the December lows at $90 for Disney shares followed through by large gains on Tuesday are setting the stage for possible new all-time highs above $96.
In the light of an 18% gain in auto sales for the largest US automaker;General Motors Company (NYSE:GM) reports quarterly earnings on Wednesday. With gas prices down by over a third and fuel-efficiency worries out of the window; sport utility vehicles and SUV’s are the order of the day in America. GM timed the release of new models perfectly mid-last year when oil prices peaked and with car-financing rates at record lows, GM has been benefitting ever since.
Recalls and resulting legal issues have been a drag on GM shares in the last year but with the company seemingly through the worst of it, lower prices at the pump may be what are needed to snap out of the drift lower. Shares hit $36 in January, the highest in five months and could be on their way to rechallenge the 2013 peak at $41 should today’s earnings impress.
Yum! Brands, Motorola and Merck also report earnings on Wednesday and looking ahead to Thursday social media will be in focus with reports from Twitter and LinkedIn.
ADP Non-Farm Employment data is released at 1.15pm GMT followed by ISM Non-Manufacturing PMI data released at 3pm GMT and crude oil inventories at 3.30pm GMT.
Futures suggest the:
S&P 500 will open 9 points lower at 2,041 with the
Dow expected to open 18 points lower at 17,608 and the
NASDAQ 20 points lower at 4,209.
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