While you were sleeping: UPDATED US stocks fall as first quarter earnings season starts

US stocks rose then fell at the start of a first-quarter earnings season that is expected to paint a bleak picture of corporate profits.

Shares of Alcoa rose 4% along with other metal and gold producers. Alcoa traditionally opens the reporting season and its latest quarterly results were released after the market closed.

“The corporate earnings outlook is low to flat,” said Oliver Pursche, chief executive at Bruderman & Co. After a near two-month rally in U.S. equities, “the best word for sentiment right now is probably ‘confused,’” he told Dow Jones.

The US dollar fell, touching the lowest level against the yen in 17 months. Federal Reserve policy makers, notably chairwoman Janet Yellen, have made it clear that they now expect fewer interest rate increases this year than they did a few months ago.

The Fed's next two-day policy meeting starts on April 26.

"The bottom line is that an April [Federal Open Market Committee] rate hike looks unlikely," says Thierry Albert Wizman, global interest rates and currencies strategist, at Macquarie Group in New York.

Still, he adds that the FOMC believes that gradual increases in the federal funds rate over time are still appropriate. "So June is still live," he says.

Gold and oil rise
Both gold and oil strengthened. US oil rose 1.6% to $US40.36 a barrel, the first time in two weeks it has risen over $US40.

A report showed China's producer prices posted the first monthly increase in more than two years.

"The producer-price index number has delivered a signal that [China's] economy is picking up and the consumer-price index is also acceptable as long as it doesn't accelerate too fast," Wu Kan, a fund manager at JK Life Insurance in Shanghai, told Bloomberg.

On Wall Street, the Dow Jones Industrial Average fell 20.55 points, or 0.1% to close at 17,556.41. The Nasdaq Composite Index eased 0.4% to 4838.40 and the Standard & Poor's 500 Index slid 0.3% to 2041.99.

"We are likely to remain in a somewhat frustrating environment for both bulls and bears, where we're just not getting data that's materially supportive of either position," Eric Wiegand, senior portfolio manager at US Bank's Private Client Reserve in New York, told Reuters.

Newmont Mining climbed 6.9% as the price of gold gained 1.1% to $US1257.70 an ounce. Freeport-McMoRan rose 4.6%,

In Europe, the Stoxx 600 Index ended the session with a 0.3% advance from the previous close, as bank and mining shares rose.

France's CAC 40 Index rose 0.2% while Germany's DAX Index climbed 0.6%. The UK's FTSE 100 Index slipped 0.1%.

 "The gains we're seeing look like a dead-cat bounce – fundamentals look shaky and sentiment is still very fragile," Michael Ingram, a market strategist at BGC Partners in London, told Bloomberg.

"This is more about positioning than investment. Looking at the movers, they seem to be led by banking stocks, so perhaps the news of the Italian central bank and Treasury meeting today on a fund set-up is helping to boost sentiment."

(BusinessDesk)