After The Close - The U.S. stock market put in a choppy session today. At the end of the day little progress was made, as the Dow Jones Industrial Average closed down 22 points; the broader S&P 500 Index slipped about one point; but the NASDAQ managed to hold onto a 13 point gain. Market breadth was mixed, as advancing issues were about even with decliners. Furthermore, the market sectors were largely divided. There was strength in the healthcare and utility issues, but the energy and industrial names were weak.
Technically, the recent rally has pushed the S&P 500 Index and the Dow back near new high ground. However, it should be noted that these averages have run into resistance at these levels on several occasions over the past few months. So, it remains to be seen if the bulls can push stocks meaningfully higher from here. Notably, the earnings season, which usually lends a temporary boost to stocks, will soon be winding down. It should be remembered, too, that we are now entering the month of May, and we will see if the saying “sell in May and go away” holds true his year, as it did in the not too distant past.
Investors received a batch of mixed economic reports this morning. There was some mildly disappointing news. Specifically, initial jobless claims rose to 344,000 for the week ended March 26th, which was a bit higher than had been anticipated. The weekly continuing claims moved up, too, lending some support to the idea that the employment situation might be taking some further time to fully mend. We will get more information on this front tomorrow, when the April nonfarm payroll figures are released. Further, construction spending rose only 0.2% in March, while many had been looking for a stronger showing. On a brighter note, the ISM Manufacturing Index came in at 54.9 in April, which was better than had been expected, and higher than the prior month’s reading. We also saw an uptick in personal income and spending during the month of March, which is a positive indication.
Meanwhile, first-quarter earnings reports continue to stream in. We recently heard from energy leader Exxon Mobil (XOM - Free ExxonMobil Stock Report). That stock slipped, after the company issued flattish results. In the financial area, we heard from MasterCard (MA). That stock traded higher, as investors were pleased with that company’s figures. Tomorrow, we hear from Chevron (CVX).
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:15 PM EDT - Wall Street is starting out the merry month of May in tame fashion. Right around the noon hour on the East Coast, the Dow Jones Industrial Average is relatively unchanged, while the NASDAQ is up 23 points and the broader S&P 500 is up a couple of points.
The good news is that a number of signs are pointing to a sustained uptick in the economy, after a weak start to the year, to some degree owing to poor weather. Today’s business indicators contained some upbeat data, with personal income and spending rising at rates that suggest a healthy amount of consumer activity.
Figures on manufacturing and domestically produced vehicle sales also pointed higher, as did construction spending. However, the last number in this trio came in less than expected. Meantime, initial unemployment claims rose for a second consecutive week, which was somewhat of a negative for market sentiment heading into tomorrow’s big monthly government payroll report.
Regarding Friday’s jobs report, investors are looking for a solid 215,000 jobs to have been added in April which, if annualized, would mean payrolls in the United States are increasing by nearly 2.6 million a year. Such a rate would suggest a decline in the rolls of the unemployed, currently around 10.5 million and, in turn, more buying power on the part of consumers.
Elsewhere, government agency Freddie Mac reported that the average rate for a 30-year mortgage fell to 4.29% from 4.33% this week. That is an attractive rate for borrowers, but higher than the 3.35% average of a year earlier. Prospective homebuyers are also not completely enthused by the selections available, while prices for existing homes have risen noticeably of late. As a result, the investment community is wondering if the housing market will continue to provide as much support for the economy going forward.
Rising gasoline prices are another concern, although drivers may get some relief when summer rolls around. The price of oil fell under $100 a barrel on Wednesday after the report of weak first-quarter GDP and the release of data showing U.S. stockpiles of oil were at record levels. That could point to lower pump prices ahead, particularly if the seasonal trend toward lower gasoline prices holds after Memorial Day.
Stocks in the news today include MasterCard (MA), which is up nicely following a positive earnings release and ExxonMobil (XOM - Free ExxonMobil Stock Report), which is off a fraction after reporting lower first-quarter production. Overall, though, there is a subdued feel to trading ahead of tomorrow’s big employment report. - Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – It’s another busy day on the earnings front, and investors are trying to digest reports from a slew of high-profile companies. One of the biggest gainers at this early hour is Yelp (YELP), an online provider of local business reviews. First-quarter results were better than expected and the company issued an upbeat outlook, causing its stock to climb nicely higher in the premarket. The same is true for shares of diet services provider Weight Watchers (WTW) and telecommunications company T-Mobile US (TMUS). Other equities moving higher ahead of the bell on earnings news include energy giants Exxon Mobil (XOM – Free Exxon Mobil Stock Report) and ConocoPhillips (COP), health insurer Cigna (CI), and credit card processor MasterCard (MA). It was not all good news, however, and Wall Street is expressing displeasure with results and/or outlooks from insurer MetLife (MET), cosmetics company Avon Products (AVP), electronics maker Sony (SNE), and fiberoptic telecommunications equipment manufacturer JDS Uniphase (JDSU).
Elsewhere, shares of DIRECTV (DTV) are indicating a stronger opening this morning, after news reports surfaced that telecommunications heavyweight AT&T (T – Free AT&T Stock Report) may be looking to acquire the satellite television provider. – 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 - An uneasy calm fell over Wall Street on the morning and early afternoon of the final day of April, as investors nervously awaited the latest unfolding of the periodic soap opera known as the Federal Open Market Committee meeting. The culmination of this two-day event was widely expected to produce a further $10 billion-a-month reduction in bond-buying activities and no change in short-term interest rates. And, on cue, the Fed did what was expected.
Of course, it wasn't just the anxious time before the FOMC meeting's conclusion that held court on Wall Street, but also the further mass issuance of quarterly earnings reports (which brought some hits and a few misses), the release of several conflicting economic reports, continuing angst over the tense situation in Ukraine, and of course, the perennial debate about the Fed and its monetary policies.
As to these events, the economic news was most interesting. Here, data showed an even worse first-quarter showing than had been expected, as the nation's gross domestic product affirmed just a scant 0.1% pace of improvement. A growth rate of 1.2% had been the forecast. Of course, most of the blame was put on the weather, and that seems reasonable, especially as so many of the reports issued in more recent weeks have been supportive. On point, yesterday also saw the release of better-than-expected private-sector job creation figures from Automatic Data Processing (ADP) and the release of a report detailing that manufacturing activity in the greater Chicago area had hit its highest level in six months. All of this is a prelude to even more critical and forward-looking reports out the next two days, with issuances on U.S. manufacturing today and data on job growth and the unemployment rate tomorrow.
As to earnings, they also were mixed, with a dour forecast from social networking provider Twitter (TWTR) taking center stage on the day. That stock fell sharply, in response, touching a 52-week low in the process. From peak to trough, that relatively recent new issue has fallen some 50%. The shares are now suggesting a slightly lower opening this morning. A number of other high-profile names also fell on the day.
As to the market, the Fed's issuance was generally supportive for the bulls, who managed to build upon some early and very slight gains on the day over the final two hours of trading. By the close, in fact, stocks were near their highs for the session, thereby providing a decent ending to a fairly constructive month. As to the specifics, the Dow Jones Industrial Average ended the trading day with a gain of 45 points; the Standard and Poor's 500 Index had added six points; and the tech-laden NASDAQ had pushed 11 points higher, after some early weakness. The small-and mid-cap composites also acquitted themselves well, with proportionately bigger increases than their larger-cap counterparts.
Going forward over the balance of the week, the big release today is the Institute for Supply Management's report on manufacturing activity across the country in April. A small gain, from a reading of 53.7 to one of 54.1, is the forecast. Also, we will be getting data on April vehicle sales throughout the day; a flattish result is the forecast. Meanwhile, the government has reported that first-time jobless claims fell modestly in the latest week, while we saw personal income rise by 0.5% in March and personal spending surge 0.9%. Both of these reports signal that the economy was regaining some strength as the first quarter drew to a close. Then, tomorrow, the Labor Department will issue the most closely watched and eagerly anticipated report of the month when it issues the April figures on job creation and the unemployment rate. Expectations are that the nation added 215,000 non-farm payrolls last month, up from 192,000 in March, while the jobless rate is expected to have edged down from 6.7% to 6.6%.
Looking ahead to the first trading day of the often troubling month of May, we find that stocks were mostly higher in Asia overnight, led by Japan's Nikkei while they are edging forward in Europe thus far this morning. As to our markets, the early action in the futures is narrowly positive, as we await the monthly report on manufacturing activity, which will be out at 10:00 (EDT). - Harvey S. Katz
At the time of this article's writing, the author did not hold positions in any of the companies mentioned.