On Thursday, the shares of Amazon.com Inc. surged more than 13 %. This came after the e-commerce giant posted fourth-quarter earnings of 45 cents a share which topped expectations of only 18 cents a share. Shares of Amazon.com Inc. (NASDAQ:AMZN) traded at $353.01 a share after the company reported fiscal fourth-quarter net income of $214 million, or 45 cents a share. This was down compared with earnings of $239 million, or 51 cents a year earlier. On the upside was Amazon’s revenue which rose 15% from a year earlier to $29.33 billion. Despite the increase, the number was below analysts’ forecasts of $29.67 billion. Sales rose to $29.33 billion, up 18% after adjusting for the impact of currency exchange rates while Amazon had projected sales of between $27.3 billion to $30.3 billion. Also, the company’s operating expenses rose to $28.7 billion from $25.1 billion. Over the past 12 months, Amazon stocks have fallen 19 percent.
U.S. Stocks Gain As Oil Rebounds
On Thursday, U.S. stocks ended higher. This came in response to rebounding oil prices as well as better than expected data out of the U.S. Earlier in the day, WTI oil futures fell sharply but the commodity rebounded to settle at around $44 a barrel. Meanwhile, the pending home sales index fell 3.7% during December. Despite this, the year-on-year gain was 11.7 percent which marked the highest since June 2013. In other economic news, the Labor Department reported that the number of people who applied for U.S. unemployment-insurance benefits dropped to 265,000, down 43,000, in the week that ended January 24. This marked the lowest tally in 14 years and was also the biggest decline since November 2012. At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) increased 1.3%, or 225.48 points, to 17,416.85. The index was lifted with big gains in McDonald’s Corp and Boeing Co. Also on the upside was the tech-heavy Nasdaq Composite index (COMP) which ended the day up 1%, or 45.41 points, at 4,683.41. Following the upward trend was the S&P 500 index (SPX) which closed up 1%, or 19.10 points, at 2,021.26. All 10 main sectors on the index finished higher.
Gold Posts Biggest Drop in Over a Year
On Thursday, gold posted its biggest daily percentage drop in 13 months. This came as jobless claims in the U.S. fell sharply while the commitment by the Federal Reserve to tightening monetary policy later in the year negatively impacted the precious metal. Gold for February delivery dropped 2.4 percent, or $31.30, to settle at $1,254.60 an ounce, while March silver futures also declined 7.3%, or $1.32, to $16.77 an ounce. According to government data, the number of U.S. workers making first-time claims for unemployment benefits fell to 265,000 in the week ended January 24. This was down from a revised 308,000 a week earlier. This decline was much larger than expected by economists and it took initial claims to the lowest level since 2000. Adding to gold’s decline was a recovery in U.S. stocks and the U.S. dollar (USD). In other commodity news, platinum for April delivery dropped 3.3%, or $41.20, to $1,217.30 an ounce, while high-grade copper for March delivery fell 3 cents, or 1.1%, to $2.45 a pound.
In the Spotlight – Google Shares Fall on Disappointing Revenue
On Thursday, Google Inc. reported disappointing revenue growth in the holiday quarter. The Internet search giant cited strong currency headwinds as well as slowing growth in its maturing search-advertising business as the reasons for the poor earnings results. Over the past 3 months, the shares of Google have dropped 7 percent, falling 2.8 percent in after-hours trading on Thursday. This decline in recent months has been caused by slowing revenue growth in Google’s core search advertising business. While the Google Play Store and YouTube have been performing well, these two faster-growing businesses remain small compared with search. There has been a decrease in the amount that Google receives per ad click and while the number of clicks increases, the majority of clicks come from smartphones which is viewed as less valuable by advertisers. According to Google’s fourth quarter earnings reports, clicks on advertiser links next to Google’s search results increased 14% from a year earlier. Despite this increase, Google got paid 3% less per click from a year earlier. In terms of revenue, Google reported an increase to $18.1 billion from $15.7 billion. This was below analysts’’ expectation for $18.46 billion in revenue. Google also reported profit of $6.91 a share, or $4.76 billion, which was up from $4.95 a share, or $3.38 billion. Excluding stock-based compensation, discontinued operations and other items, per-share earnings rose from $6.70 to $6.88 which was lower than analysts’ expectations for earnings of $7.11 a share. In order to maintain growth, Google has been spending more and in the fourth quarter, operating expenses were $6.78 billion or 37% of revenue. This was up from $5.03 billion, or 32% of revenues, in the year-ago quarter. Google’s research-and-development expenses also rose to $2.81 billion, up 46 percent.
On Friday, among the companies whose shares are expected to see active trade include Chevron Corp. and MasterCard Inc. According to analysts, Chevron (CVX, -0.68%) is projected to report fourth-quarter earnings of $1.64 a share while MasterCard (MA, +3.72%) is forecast to post fourth-quarter earnings of 67 cents a share.