After the Close - Stocks turned a touch weaker today, with the market closing in the red after briefly turning positive earlier in the afternoon. At the end of the day, the Dow Jones Industrial Average and the NASDAQ were down 23 points and four points, respectively. More broadly, the number of declining issues on the New York Stock Exchange outpaced those advancing by a wide margin.
Trading was subdued for much of the session, with Wall Street digesting the big gains generated in recent weeks. There was also a bearish undertone to sentiment, with a greater-than-anticipated reading on inflation out of China this morning. The concern is that officials in China may deem it necessary to tamp down economic growth, although it is probably too soon to be overly worried about that possibility. In any case, stocks in Asia were lower overnight.
The day’s economic data stateside was not particularly inspiring, either. Wholesale inventories advanced, according to the Commerce Department, but not as much as expected. Stockpiling inventory can be a plus for growth, since that keeps factories humming. Wholesale inventories at the end of March were up 4.7% from the year earlier, pushing GDP higher.
Looking ahead, GDP growth in the U.S. is expected to level off at about 2.0%, on average, in the coming quarters, on the prospect of lesser gains in consumer spending. Nevertheless, investors have obviously warmed to the idea that growth will at least be steady. After all, 2% of the United States’ $15 trillion-plus economy would be more than $300 billion, or about the size of Malaysia’s or Venezuela’s economy, and an impressive amount in terms of added output.
Tomorrow’s business news agenda is light again, with only a report on the U.S. Treasury’s budget surplus for April on tap. Treasury generates a surplus in April because taxes are filed that month. This year’s surplus is projected to be greater than the prior year, owing to the business expansion and marginally higher tax rates.
Investors may be more attuned to a speech Federal Reserve Chairman Ben Bernanke is giving in Chicago about the time the market opens. The Fed’s aggressive bond-buying program is seen as providing a significant underpinning to the stock market’s surge. Any hints as to its sustainability will likely be pounced upon.
Meantime, earnings releases are expected from prospective natural gas exporter Cheniere Energy (LNG) and miner Silver Wheaton (SLW), although most of the big-name companies have already released their first-quarter numbers. - Robert Mitkowski
At the time of this writing, the author did not have any positions in of the companies mentioned.
12:35 PM EDT - The stock market is putting in a mixed showing this morning, but the major averages are off of their session lows. At just past noon in New York, the Dow Jones Industrial Average is off 10 points (-0.1%); the broader S&P 500 Index is lower by four points (-0.2%); and, the tech-heavy NASDAQ, which is a bit more resilient today, is testing a move into positive territory. Market breadth confirms some underlying weakness, as declining stocks are ahead of advancers by almost 2-to-1 on the NYSE. However, these figures look a bit better on the NASDAQ. Weakness is also apparent when looking at the major market sectors, most of which are trading lower. There is considerable weakness in the utilities, as well as in the consumer cyclical and financial names. On the bright side, there is some strength in the capital goods issues, and the basic materials sector is making some progress.
Technically, the S&P 500 Index has logged an impressive run since the start of this year, with little let up. In that time, the index had just two minor pullbacks, just touching its 50-day moving average on both occasions, before quickly resuming a move higher. Moreover, the market has staged a steady run over the past two weeks, so a rest here would likely be in order.
Meantime, traders are largely looking past some decent economic reports today. Specifically, initial jobless claims for the week ended May 4th dropped to 323,000 from 327,000 in the prior week. The showing was quite a bit better than had been forecast. Notably, when claims are below 350,000 it suggests that the employment situation is getting materially better. It was encouraging, too, that the weekly continuing jobless claims also dipped. Elsewhere, wholesale inventories rose 0.4% for the month of March, which was slightly higher than had been expected. This also stands in contrast to the decline in inventories in February, and may suggest that the business outlook is brightening again.
Also, there were a handful of earnings reports put out today. We heard from Tesla Motors (TSLA). That issue is up dramatically, after the alternative carmaker posted better- than-expected profits. Further, Green Mountain Coffee (GMCR) reported solid quarterly profits and issued healthy guidance. Its stock is soaring.
Actively traded stocks moving up in price today include: Boston Scientific (BSX), News Corp. (NWSA), and Groupon (GRPN). Issues moving lower are: Activision Blizzard (ATVI), Monster Beverage (MNST), and McDermott (MDR). - 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 – A number of stocks are making big moves in the premarket on earnings news. Shares of electric vehicle manufacturer Tesla Motors (TSLA) and coffee roaster and distributor Green Mountain (GMCR) appear to be the two biggest winners, as both delivered solid March-quarter results. Green Mountain also announced that it has extended its partnership with coffee shop operator Starbucks (SBUX). Other stocks indicating higher openings on earnings news include media and entertainment giant News Corp. (NWS), dairy producer and distributor Dean Foods (DF), and energy company Apache (APA). Barnes & Noble (BKS) stock is also soaring ahead of the bell, after reports surfaced that Microsoft (MSFT – Free Microsoft Stock Report) may be looking to pay $1 billion for the digital assets of Nook Media, a joint venture between the bookseller and the software giant.
It was not all good news, however, and shares of energy drink maker Monster Beverage (MNST), video game developer Activision Blizzard (ATVI), satellite television provider Dish Network (DISH), and oilfield services company Transocean (RIG) are all indicating lower openings after reporting disappointing March-period financials. – 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 - The records keep falling. Of note, one day after the Dow Jones Industrial Average and the Standard and Poor's 500 Index both hit all-time records, with the former moving past the 15,000 mark, that 30-stock composite pushed upward again yesterday, rising past 15,100 in a buying flurry that netted this index 49 points on the day. Not to be outdone, the S&P 500 Index added seven points, rising further above 1,600, while the tech-heavy NASDAQ bolstered by gains in a number of key issues, jumped 17 points. The NASDAQ, albeit some 1,700 points from a record close, is still above 3,400 at this time.
Boosting the market yesterday were gains by both the technology and materials issues. It is interesting to note that these two groups had been among a select group of laggards earlier this year, especially the latter sector, where the steels, aluminums, and other metals makers had all been suffering under the weight of notably poor earnings. In some cases, especially the steels and the coal stocks, selective bottom-line losses have been the norm. However, with our economy likely poised for a better final half, with China now finally seeing some better import and export results, and with Europe experiencing some initial hints of a possible bottoming in its long economic slide, there is some logical nibbling among the basic industry suppliers.
The recent firming in these heretofore laggards may also be a case of just playing catch up, as almost all of the other groups have long been participating in the climb higher. Now, it may just be a case of it being their turn. Such rotation often takes place during the latter stages of an extended move, either up or down.
All of this is evolving on what has been a notably sparse week for economic news. The lack of significant metrics on our shores is leading to some more intense looks overseas. Thus, we saw a day or so ago that exports jumped in China. Now, however, data just issued earlier today showed that inflation has risen more than expected. This gave global investors an impetus to cash in on some of their recent gains. As a result, Germany's DAX, which had climbed to a record high the other day, eased back slightly this morning, as did the London FTSE 100. And overnight, Japan's Nikkei dropped by 0.7%, following a string of gains that had sent that once-struggling index to a succession of five-year highs.
Meanwhile, on our shores, the economic calendar remains light, with no monthly issuances of note over this five-day stretch. Still, this morning did produce the weekly jobless figures. And here, first-time claims fell to 323,000 in the latest week, a drop of 4,000 from the prior week's upwardly revised figure. Expectations had been for an increase to 335,000. The four-week average also declined. Still in spite of the better claims data, our equity futures are now suggesting some early profit taking, which has often been the pattern of late. This time, the S&P 500 futures are off by three points, while the NASDAQ futures are in the minus column by almost 10 points. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.