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US shares struggle as oil, Ford and Atlanta Fed deliver bad news

US shares stretched over the line to post a modest gain in afternoon trading on Thursday, despite weaker oil prices, a downbeat motor outlook from industry behemoth Ford and depressed growth forecasts from the Atlanta Fed
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Not a badge of pride as autos sector boom seen over
US shares stretched over the line to post a modest gain in afternoon trading on Thursday, despite weaker oil prices, a downbeat motor outlook from industry behemoth Ford (NYSE:F) and depressed growth forecasts from the Atlanta Fed.
 
The market bellwether S&P 500 was up 0.1% at 2,169, having spent most of the session in negative territory.
 
The US oil benchmark West Texas Intermediate was down 1.8% at $41.15, its lowest level since mid-April and its sixth successive session of falls, as brokers at Goldman Sachs waded in with their latest prognosis of where oil prices are headed.
 
Although the dollar was downbeat on Thursday, Goldman Sachs said that a strong dollar deserves more blame for an oil price downturn than a gasoline glut. 
 
With the increased prospect of the US Federal Reserve raising interest rates oil prices could fall below $40 per barrel. Goldman said that while there is indeed a glut of gasoline, it won’t be responsible for further declines in oil prices because it is a supply-side and not a demand-side problem.
 
The S&P Midcap 400 was up 0.4% at 1,554, while the S&P Smallcap 600 was still to nurse itself back to gains, last seen down 0.2% at 743.
 
Ford Motor Company reported weaker-than-expected profit in the second quarter and declared that the US auto industry's long recovery was at an end, sending its stock and those of other auto companies tumbling.
 
Shares of General Motors Co (NYSE:GM) came off 3.4% to $30.94 as its market value fell about $1.7bln. Fiat Chrysler Automobiles shares (NYSE:FCAU) dropped 4.5% to $6.40 following Ford's results. Ford itself lost 8.6% to $12.64.
 
Meanwhile, the Atlanta Fed, a regional branch of the US central bank, said it now expects the world’s biggest economy to have grown at a 1.8% clip in the second quarter. The estimate, which comes a day before the Commerce Department unveils official growth figures for the second quarter, compares with Street expectations of 2.6%, and growth of 1.1% in the first three months of 2016.
 

Open

The dollar remained subdued as investors digested the Federal Reserve's statement along with a mixed bag of results before the bell this morning.

As expected the Fed held rates steady, but left investors guessing at future guidance on monetary policy.

The Dow Jones Industrial Average opened 63 points lower at 18,408.

The top winner was Travelers Company Inc (NYSE:TRV) up half a percentage point to 117.

The biggest loser was Boeing Co (NYSE:BA) down almost 2% to 133. Yesterday the aircraft builder reported the first loss in seven years.

Shares in Ford Motor (NYSE:F) dipped 8% after the car-maker reported a 9% drop in profits for the second quarter.

Whole Foods (NASDAQ:WFM) shares fell 6% following a downbeat outlook yesterday.

Nasdaq was flat on yesterday's close at 5,140.

A US$2bn quarterly profit managed to push Facebook (NASDAQ:FB) shares 3% higher.

Later today, Facebook's rival Alphabet (NASDAQ:GOOG) and online retailer Amazon (NASDAQ:AMZN) are due to release results.


Preview at 9.29am

US shares were set for a quiet start as investors mulled the Fed’s latest comments, Apple’s startling gain yesterday and Oracle’s bid for NetSuite.

Spread bet firms see the Dow Jones Industrial Average opening around thirty points lower at 18,472 as an interest rate rise now seems possible in September.

Last night, the US central bank indicated that risks to the economy had diminished, which some Fed watchers suggested meant action may be soon.

Rob Carnell, Chief International Economist at ING, said that the last time the Fed had remarked risks were diminishing was last October – the meeting before it hiked rates for the first time in a decade.

Elsewhere, the 6.5% rise in Apple’s (NASDAQ:APPL) share price Tuesday was generating plenty of attention as it was the second largest daily rise in the iPhone maker’s history.

The surge was sparked by better than expected quarterly results and hopes the iPhone may start to pick up again.

Pre-open earnings news was disappointing, with Ford (NYSE:F) and ConocoPhillips underwhelming their supporters though Facebook (NASDAQ:FB) was going well after it beat market forecasts.

Oracle(NYSE:ORCL), meanwhile, agreed to acquire business software group NetSuite (NYSE:N) for US$9.3bn or US$109 per share.  


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