Divergent Signals Generate Uncertain for Stocks
US stocks began the trading session under pressure, coming off Wednesday mixed results which saw the Nasdaq notch up strong gains but the Dow Industrials weighed down by IBM. Earnings surprised to the upside after the closing bell on Wednesday. Both Ebay (NASDAQ:EBAY) and Netflix (NASDAQ:NFLX) delivered better than expected numbers, each rising substantially in pre-market action. Chinese manufacturing numbers weighed on Asian and European stocks, which spilled over into US futures. Stocks notched up one of their worst performance of the year with the Dow down 1.07%, the Nasdaq down 0.57% and the S&P 500 down 0.89%.
Chinese HSBC flash PMI has dropped into contraction territory printing below 50 for the first time in the past 6-months. HSBC reported a flash number of 49.6 in January from 50.5 in December and missing consensus for a rise to 50.6. Stocks in Asian closed lower with the Nikkei and Shanghai dragging on other bourses.
The euro area manufacturing PMI rose to 53.9 from 52.7 in December. This result was the best reading since May 2011. The service PMI rose to 51.9 from 51.0, which is a 4-month high. The composite rose to 53.2 from 52.1 and is the sixth month above the 50 boom/bust level. German manufacturing continued to show strength. The 56.3 reading compares with 54.3 in December. The service PMI was unchanged at a firm 53.5.
Netflix’s shares rallied more than 15% higher premarket following a stellar fourth quarter as net profit surged to $48 million from $8 million a year earlier. Earnings per share increased to $0.79 topped consensus estimates, and revenue rose 25% to $1.18 billion and also beat analyst expectations.
eBay’s earnings for the fourth quarter rose to $850 million from $751 million, but all the post-match chat was dominated by news that Carl Icahn has taken a 0.8% stake in the company and called for it to spin off PayPal. The company’s fourth quarter adjusted EPS was $0.81 and beat consensus but revenue missed expectations despite growing 13.5% to $4.53 billion.
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