After The Bell - Stocks sputtered today, hampered by economic data that did not fully live up to expectations and renewed worries about Europe. At the close, the Dow Jones Industrial Average had given up 15 points and the NASDAQ had lost 23 points. Three stocks fell for every two rising on the New York Stock Exchange. But, in an indication of the market’s overall strength this year, there were many more stocks hitting fresh 52-week highs than lows.
For the month of April, stocks were flattish on the whole, although they did enjoy a spurt last week, when good earnings reports from big-name companies provided some cheer. The same sort of compelling profit news from the market leaders was not in evidence today, however.
Among sectors, industrial, financial, and technology shares were among the weakest, with the stocks of Cummins (CMI), Citigroup (C), and Apple (AAPL) falling notably on a percentage basis in those respective groups. Apple’s fall pulled the NASDAQ down more on a percentage basis than the Dow. Utility stocks bucked the trend, as concerns over slowing economic growth brought that defensive sector back into favor today, although utilities have lagged so far in 2012.
Rising government bond prices were another indication of the market’s cautious tone. The yield (which moves in the opposite direction of prices) on the 10-year Treasury note fell from 1.93% to 1.91%. About six weeks ago, the yield on the 10-year note was approaching 2.40%. The dip back below 2.00% suggests investors are uncertain about business trends.
Tomorrow brings the start of a new trading month. Investors are hoping the old saying to ``Sell in May and go away’’ is not one that needs to be followed. And the truth is, it doesn’t, necessarily. There are some seasonal tendencies in the stock market, but most of the time they are far outweighed by trends in the economy, interest rates, and corporate profits.
Economic reports due out on Tuesday are expected to show slowing growth in manufacturing for April, but a turnaround in construction spending for March. Elsewhere, April auto sales are thought to have inched ahead.
With respect to earnings, Automatic Data Processing (ADP), CBS (CBS), and Pfizer (PFE – Free Pfizer Stock Report) are due to report their-first quarter results tomorrow. But with most of the Dow stocks having already reported, investors may be turning their focus to the economy and the ongoing drama in Europe. - Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
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12:30 PM ET - The U.S. stock market is trading lower today. Before the opening, traders likely took their cue from the International markets. Recent economic data indicating that Spain has officially slipped into a recession probably rattled some traders. Further, political uncertainty in France has also become an issue lately. As the bourses closed out the session, France’s CAC-40 was off about 1.5%, while losses were more contained on Germany’s DAX, and on Britain’s FTSE 100. Meanwhile, the euro is off slightly to $1.32.
The economic news in the United States has been a bit mixed, as well. The Department of Commerce reported that personal income rose 0.4% in March, which was just a bit better than many economists had expected. However, personal spending increased 0.3%, which was a bit weak. Later in the morning, the Chicago PMI came in at 56.2 in April. A somewhat higher reading had been anticipated. However, the report was not all bad, as the region’s order backlogs and employment figures showed some strength. We get a better look at the nation’s manufacturing situation tomorrow, as the ISM Index for April is set to be released. We will also get a look at the construction spending numbers for March, as well as auto and truck sales for April.
In the corporate news, shares of Barnes & Noble (BKS) are soaring on reports that Microsoft (MSFT - Free Microsoft Stock Report)will be making a large investment in the Nook technology. Health insurance company Humana (HUM) is seeing its stock slip, after the company posted disappointing results. There has also been a bit of merger news out today. Medical company Hologic (HOLX) has agreed to purchase Gen-Probe (GPRO) a maker of diagnostic products. The news has sent Gen-Probe shares up sharply. Also, in the medical area, Warner Chilcott (WCRX) stock is also up strongly on news that the company is looking for a buyer. In commodities, Energy Transfer Partners (ETP) is planning to buy Sunoco (SUN) sending that issue higher.
As we pass the noon hour in New York, the markets have not been able to reverse course in any meaningful way. The Dow Jones Industrial Average is off 35 points (-0.3%); the S&P 500 Index is lower by seven points (-0.5%): and the NASDAQ is slipping 18 points (-0.6%). Market breadth is negative, as decliners are outnumbering advancers by roughly 2 to 1 on the NYSE. The market’s sectors are largely trading lower. Weakness is apparent in the capital goods and basic materials shares. There is some strength in the healthcare sector and the utilities are holding up well. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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Stocks to Watch from The Survey – This weekend brought another flurry of merger and acquisition activity. Pipeline company Energy Transfer Partners (ETP) has agreed to pay roughly $5.3 billion to acquire integrated petroleum company Sunoco (SUN). At approximately $50.13 a share, the transaction would represent a 23% premium to Sunoco’s preannouncement closing price on Friday. Sunoco shares jumped in premarket trading. In other news, Hologic (HOLX), a designer and manufacturer of diagnostic and medical imaging systems, has reached a deal to acquire Gen-Probe (GPRO), which develops nucleic acid tests to diagnose diseases and screen donated human blood. Under terms of the agreement, Hologic would pay $82.75 a share in cash for the Gen-Probe, a 20% premium to its closing price on Friday. Gen-Probe stock rose sharply on the news, while Hologic shares are down in the premarket.
Software giant Microsoft (MSFT – Free Microsoft Stock Report) and bookseller Barnes & Noble (BKS) caused a splash after they announced a partnership to create a B&N subsidiary that would include the retailer’s digital and college businesses. Microsoft will invest $300 million in the subsidiary for a 17.6% stake, with B&N owning the remainder. The deal gives Microsoft a toehold in the e-book business, while Barnes & Noble gets an opportunity to unlock shareholder value. Indeed, investors cheered the move, and B&N shares nearly doubled in premarket trading.
Of course, today will bring news on corporate earnings, as well. Of note, beer giant Anheuser-Busch InBev (BUD) and health benefits company Humana (HUM) both delivered lackluster results and the stocks are lower in the premarket. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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Before The Bell - The stock market completed its best week in more than a month during the most recent five-day stretch, rising in spite of further signs that the U.S. business expansion may be faltering. The rationale for the seemingly contradictory performance may well have been that investors now see the possibility of new Federal Reserve stimulus. That is still a possibility. The rally, however, may also have been the result of a generally better-than-expected performance out of Corporate America during the current earnings reporting season. Whatever the reason, the leading averages now stand at or near their best levels of the year, with the Dow Jones Industrial Average within a thousand points, at 13,228 of its all-time high reached in 2007. Subsequent to that record, this 30-stock composite proceeded to fall by more than 50%, toughing at below 6,500 in early 2009.
Now, as we look out to a new week, and beginning tomorrow to a new month, we find that the world stock markets have given back some early gains and are largely trending lower at this time. Over here, the futures, which had been flat-to-slightly in the black several hours ago, are now pressing lower, albeit not decidedly so, with the Standard and Poor's 500 Index futures now off by more than three points and the NASDAQ futures lower by just over nine points.
As for news in the week ahead, we have a fairly busy week of economic reports to ponder leading off with data earlier issued by the Commerce Department showing that personal income had risen by 0.4% in March, while personal consumption expenditures gained 0.3%, as consumers continued to open their wallets modestly, notwithstanding high joblessness and still-falling home prices in many locales, with their negative wealth effect on American consumers.
The business beat then continues at 10AM (EDT) this morning with the receipt of a report from the Chicago purchasing managers on manufacturing output in that key Midwest region during April. A small deceleration from March is the expectation. Then, tomorrow, we are scheduled to get a look at the national manufacturing picture, when the Institute for Supply Management reports on its survey for April. Here, as well, we see further growth having evolved in April, but at a slightly lesser rate than in March. This metric will then be followed up with reports on construction spending and auto sales. Wednesday will bring data on factory orders for March, where a slight dip is the forecast. Then, on Thursday, we are due to get surveys on non-manufacturing activity and jobless claims. Finally, Friday will bring reports on employment and unemployment for April. Expectations from that Labor Department report are that about 160,000 jobs were created last month, while the unemployment rate is expected to have held steady at 8.2%.
Along with these pivotal reports, we will also be getting a continued flood of first-quarter earnings releases, including key issuances from such well-known Dow 30-companies as drug giant Pfizer (PFE – Free Pfizer Stock Report) and food processing behemoth Kraft (KFT – Free Kraft Stock Report). Along with these two bluechips, we will get earnings reports from Automatic Data Processing (ADP), Emerson Electric (EMR), and General Motors (GM) and many hundreds of additional companies. It will thus be a busy and eventful week for the stock market, after what we presume will be a moderately lower opening in about a half hour from now. – Harvey S. Katz
At the time of this report's writing, the author had positions in PFE.