First Quarter Results, Europe Turmoil & Wall Street
General Electric was among the Dow components to gain ground on Wednesday. The company’s shares climbed 3.3 percent, driven by the news of dividend payments from its subsidiary GE Capital. GE chief executive Jeff Immelt was reported as saying that the payment of dividends to GE Capital’s parent company, General Electric, demonstrated the strength of the subsidiary based on the significant steps taken to “strengthen its liquidity, capital, asset quality and profitability”. Google also gained on Wednesday (2.9 percent) upon its announcement of improved search technology, which was welcome news to the search engine giant’s investors ahead of the public listing of Facebook – Google’s online ads rival.
On the down side, JC Penney’s disappointing first-quarter sales and earnings sent shares plummeting by 19.7 percent. Abercrombie & Fitch reported weak sales in Europe which drove its overall first quarter sales and earnings down, resulting in share dropping by 13.0 percent. Staples also cited slower sales in Europe as the primary reason for its poor first quarter performance, with shares falling by 5.7 percent on Wednesday. Other publicly traded companies to report disappointing first quarter results included Wendy’s Co, Wynn Resorts and McDonald’s Corp.
Greece has called for a new round of elections, which will mostly likely take place on June 17. Meanwhile, Greek citizens are reportedly pulling hundreds of millions of euros out of the country’s banks, further jeopardizing the stability of the financial system. While maybe not as high profile as the Greek situation at this time, Spain is battling with an unemployment rate of 24.4 percent and also fears being dismissed from the euro-using countries. Add to this the US presidential elections in November, and analysts have noted that US markets are not likely to rebound any time soon.