After The Close - Stocks fell today as weaker-than-expected economic growth in China and a dip in a consumer sentiment index contributed to a bearish backdrop heading into the weekend. At the close, the Dow Jones Industrial Average was down 137 points and the tech-laden NASDAQ was 44 points lower, with the major averages finishing near their lows for the session. Proportionately, the NASDAQ was weaker than the Dow, with big-name stocks Apple (AAPL) and Google (GOOG) pacing the decline. Analysts were concerned about trends in advertising rates at Google, even after the search engine giant reported big first-quarter profits last night.

The market’s weakness was broad-based, with the advance-decline line on the New York Stock Exchange Composite Index showing about three losers for every issue gaining ground. Investors headed into government bonds for their perceived safety, with the price of the 10-year Treasury note rising while its yield dipped back under 2.00%. For the week, the Dow lost more than 1.5%.

In a reversal, the slightly-greater-than-anticipated slowdown in China turned yesterday’s winners, shares of energy and materials companies, into some of today’s poorer performing groups. That was as prices for copper, oil, and gold fell on the assumption that demand from China would be incrementally less. Shares of companies such as Hess (HES), BHP Billiton, (BHP), and Barrick Gold (ABX) dropped more than the market on a percentage basis as a result. It should be noted that growth in China remains strong. But there is a bit of uncertainty as to just how much business conditions there will slow, particularly with demand cooling for manufactured goods from customers in the euro zone.

Nonetheless, it was the financial sector that generated the day’s biggest declines. Bank stocks led the market higher in the year’s opening three months, on the thinking that they were inexpensive and the economy was showing demonstrable improvement. But the combined first-quarter profits of the six largest lenders in the United States are estimated to have eased marginally from a year earlier. If so, it may be difficult for the group to provide a similar leadership role going forward, barring noteworthy upside surprises.

Next week brings a deluge of earnings reports from Corporate America. Citigroup (C), for one, is due to report its latest quarterly results before the opening bell on Monday. Also on tap for early Monday are economic reports regarding Retail Sales for March and the New York Federal Reserve Bank’s Empire State Manufacturing Index. Somewhat slower growth is expected in both cases. On the whole, there should be plenty for investors to mull over next week. See you then. – Robert Mitkowksi

At the time this article was written, the author did not have positions in any of the companies mentioned.


12:15 PM ET - The U.S. stock market headed lower this morning, but is now making an attempt to pare its losses. As we pass the noon hour in New York, the Dow Jones Industrial Average is down 76 points (0.6%); the S&P 500 Index is slipping 11 points (-0.8%); and the NASDAQ, which is leading the market lower, is off 33 points (-1.1%). A weak tone can be seen by looking at the market’s breadth, as declining issues are outnumbering advancers by about 3-to-1 on the NYSE.

There is considerable weakness in the financial sector. The conglomerates and energy issues are also sinking. The decline in energy stocks is likely related to weaker oil prices. In contrast, there is some relative strength in the utilities. These high-yielding issues, which have been out of favor for some time, may look a bit better to investors now interested in defensive issues.

Much of the weakness today likely reflects concerns about economic expansion in China. Last night, that country released a weaker-than-expected first-quarter GDP report. Meanwhile on our shores, traders received some mixed economic reports, as well. According to the Labor Department consumer prices rose 0.3% in March, which largely matched analyst expectations.  However, the consumer sentiment report was not too strong. The University of Michigan’s Consumer Sentiment Index slipped to 75.7 in April, which was unimpressive.

Traders seem to be shrugging off some decent corporate earnings reports today. Banking giant JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) posted better-than-expected results, but the stock is trading lower. Shares of Wells Fargo (WFC) are off a bit, as well, even though the bank put out decent figures. Meanwhile, in the technology sector, Google (GOOG) is seeing its stock slip. Although profits held up well, some analysts were likely concerned about the top line. The company also announced plans for a 2-for-1 stock split.

Yesterday, the S&P 500 Index rallied, following through on an upside move that began Wednesday.  Unfortunately for the bulls, the trading volumes were light, suggesting a possible lack of conviction by traders.  With today’s decline, the S&P 500 Index is now at 1,376, which is roughly at its 50-day moving average. Some consolidation may be in order, as the equity markets have had a big run over the past several months. Hopefully, strong corporate reports, as well as some bargain hunting from the buy-the-dip crowd, can keep the market on a somewhat stable footing.   - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The Survey Internet powerhouse Google (GOOG) reported better-than-expected first-quarter earnings after the market closed yesterday. It also announced a 2-for-1 stock split through the creation of a third, nonvoting share class, partially designed to help the company’s founders maintain voting control. The stock is little changed in premarket trading.

Two of the nation’s largest banks, JPMorgan Chase (JPMFree JPMorgan Stock Report) and Wells Fargo (WFC), reported strong first-quarter results this morning. However, only JPMorgan shares are up in the premarket.

Shares of Coinstar (CSTR) are up sharply in the premarket, after the company increased its guidance due to strong demand for its Redbox¬-branded DVD-rental kiosks. On the flip side, CTS Corp. (CTS), a manufacturer of electronic components, and Infosys Technologies (INFY), an information technology services company, are both trading lower due to decreased guidance. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - It has been a rollercoaster ride on Wall Street for those long equities this week and by the look of things already, today will be no different.  After a dismal start to the week—which saw the Dow Jones Industrial Average shed nearly 344 points during the first two days of trading—equities roared back, as lower yields on euro-zone debt and rumors that China’s GDP was stronger than expected emboldened investors yesterday (more below on these two regions). The 181-point advance in the Dow 30, combined with a nice showing on Wednesday, erased a good portion of the early week setback. The performance of other major U.S. equity indexes, the NASDAQ and the S&P 500 Index, has mimicked that of the index of 30 bellwether companies this week.

Yesterday, the gains were broadbased, with each of the 12 major sectors notably higher. Among the standouts were the basic materials, capital goods, and energy stocks. The investment community seemed to shake off some mixed news on the domestic economy—both the trade gap and initial weekly unemployment claims were higher than expected, while producer prices were unchanged—instead electing to focus on the euro zone and China.

However, the new day has brought another series of events that are sure to have an effect on the psyche of investors in the forthcoming session. First, concerns have once again intensified about the sovereign-debt situation in the euro zone, with rising borrowing costs in Spain on the minds of investors. Likewise, the news was not encouraging from Asia either, as data showed economic growth slowed more than expected in China, the world's second-largest economy. Specifically, China’s GDP expanded 8.1% in the first quarter, its weakest showing since the second quarter of 2009. International trading, though, has been mixed. The Asian indexes, most notably Japan’s Nikkei 225 and Hong Kong’s Hang Seng, finished nicely higher overnight, while the major European bourses are lower thus far today on the aforementioned higher yields on Spain’s debt.

The news on these shores, though, is a bit more market supportive. Earlier this morning, JPMorgan Chase (JPMFree JPMorgan Stock Report), the nation’s largest bank in terms of assets, reported better-than-expected results, earning $1.31 per share in the first quarter, versus the consensus expectation of $1.16—though the bottom-line tally fell 3% short of the prior-year figure, revenues grew 6%. The big bank said that it originated more mortgage loans than expected in the first quarter. We expect financial stocks to be very active this morning, as JPMorgan Chase’s results are viewed as a barometer of the economy and the financial industry.

Speaking of the economy, we received another key report this morning when the Department of Labor released data on consumer prices for the month of March. Specifically, the report showed that the Consumer Price Index (CPI) for all urban consumers increased 0.3% in March on a seasonally adjusted basis. Over the last 12 months, the all items index increased 2.7%. At first blush, it was another tame reading on inflation—though rising energy costs will remain a big concern for the consumer—to go along with yesterday’s companion report on producer (wholesale) prices. Trading volume for consumer cyclical stocks may be heavy this morning following this latest CPI data.

With less than a half-hour to go before trading commences on these shores, the equity futures and trading from Europe presage a lower opening on Wall Street. Will the decent domestic reports be enough ammunition for the bulls, which will likely have to work their way back from a lower opening to trading? If we learned anything from the first four days of trading this week, the final session will likely be a volatile one for those long equities. Stay tuned. – William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.