AI
Monday, April 30, 2007 7:50:05 PM
Market Update 070430
http://biz.yahoo.com/mu/update.html
4:20 pm : After turning in such an impressive performance in April, it wasn't surprising to see investors finally start to question whether valuations would be sustainable over the near term, especially with the worst six months of the year [historically] beginning tomorrow.
Before the opening bell sounded, participants were greeted with some encouraging news on the inflation front. March core PCE, the Fed's favored inflation gauge, was unchanged. That brought the year/year rate back down to 2.1% and closer to the Fed's comfort zone of below 2%, which we believe will be reached around mid-year to leave policy makers more room to address any economic concerns with some modest easing.
Be that as it may, with the Dow, S&P 500, and Nasdaq coming into today's action with respective gains of 6.2%, 5.2%, and 5.6% for the month, a rally built on a batch of quarterly earnings results that merely checked in better than lowered expectations offered little incentive for investors to keep forging ahead with the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
Of the nine sectors losing ground, Materials (-1.6%) paced the way lower; but that could be expected since it ranks among this year's best performers.
Consumer Discretionary (-1.3%) was in focus after RadioShack (RSH 29.14 +1.42) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier prompted some consolidation among several other retailers. Homebuilders were another weak spot after a government report showed that private residential construction fell by 1% in March.
Energy turned in the third worst performance today, falling 1.2% in sympathy with a 1.1% decline in crude for June delivery, followed by a 1.0% drop in Technology. Both sectors ranking among April's top three in terms of performance also tempted investors to take some money off the table heading into a seasonally weak period for stocks.
Consumer Staples was in focus following upbeat earnings reports from Wrigley (WWY 58.88 +3.83) and Alberto-Culver (ACV 24.33 +0.98), as well as an analyst upgrade on Colgate-Palmolive (CL 67.76 +0.72). Procter & Gamble (PG 64.51 1.53) and Avon Products (AVP 39.86 +0.35) running up ahead of their Tuesday-morning reports also provided a floor of support throughout most of the day. Nonetheless, not even the proclivity of the sector to outperform during periods of uncertainty or an economic slowdown was enough to keep it in positive territory.
Telecom was the only sector to finish higher Monday, as Verizon Communications (VZ 38.18 +0.29) matched analysts' forecasts but added 1.7 mln wireless customers in Q1. Telecom was also the only sector that failed to partake in the April rally, closing out the month flat versus April gains of more than 4% on average for the remaining nine economic sectors. BTK -1.6% DJ30 -58.03 DJTA -1.7% DJUA -1.0% DOT -1.0% NASDAQ -32.12 NQ100 -1.2% R2K -1.8% SOX -1.2% SP400 -1.4% SP500 -11.70 XOI -1.0% NASDAQ Dec/Adv/Vol 2172/895/2.03 bln NYSE Dec/Adv/Vol 2379/910/1.50 bln
3:30 pm : Even though losses on the blue-chip averages remain modest in scope, selling remains the name of game going into the close. As a reminder, April has been the best month for the Dow since 1950, averaging a 1.8% return, according to the Stock Trader's Almanac.
This April, though, the Dow has soared more than 6% and has been accompanied by strong gains among several of its counterparts. The S&P 500 and Nasdaq are currently turning in the worst performances among the majors, as 8 of 10 economic sectors are now negative, but are still up more than 4% this month as investors lock in profits among many of April's winners and begin to fret about the two-decade old axiom "sell in May and go away." DJ30 -9.10 NASDAQ -22.58 SP500 -5.93 NASDAQ Dec/Adv/Vol 2095/928/1.65 bln NYSE Dec/Adv/Vol 2181/1064/1.22 bln
3:00 pm : The major averages continue to deteriorate as the Dow becomes the latest index to turn negative. The latter's reversal shouldn't come as a big shock since it has posted gains in 19 of the last 21 sessions and closed out the week last Friday with its third straight record.
The Dow is also up more than 6% in April, on pace for its best monthly performance since December 2003, with its continued charge being buoyed by large gains in only a handful of its blue-chip components. The same can be said for today as the gains it enjoyed earlier were being generated from just five components (e.g. C +1.6%, IBM +1.4%, MMM +2.0%, PG +2.5%, VZ +1.2%). DJ30 -1.81 NASDAQ -20.84 SP500 -4.18 NASDAQ Dec/Adv/Vol 2015/986/1.44 bln NYSE Dec/Adv/Vol 1966/1238/1.06 bln
2:30 pm : The indices finally break out of their recent trading ranges; but to the dismay of the bulls, the market's latest move has been to the downside. The renewed wave of selling interest within the last 20 minutes leaves all three major averages at afternoon lows, with a reversal in the Energy sector alongside a sell-off in oil prices (-1.0%) pushing the S&P 500 back into negative territory.
With the Tech sector also turning negative, it's not surprising to see the Nasdaq get hit even harder; but its intraday decline still leaves the Composite's April advance above 5%. DJ30 +17.88 NASDAQ -11.66 SP500 -0.88 NASDAQ Dec/Adv/Vol 1654/1307/1.24 bln NYSE Dec/Adv/Vol 1648/1549/940 mln
2:00 pm : Not much has changed over the last two hours as the indices continue to trade in a narrow range around the unchanged mark. The market's holding pattern has been further evidenced in the A/D line, as advancers and decliners on the NYSE remain evenly matched while declining issues on the Nasdaq hold a slim 16-to-13 advantage over advancing issues.
A similar ratio of up to down volumes paints a similarly mixed picture at the Big Board and the Composite as the sustainability of such an impressive April performance on all three major averages remains in question, especially as what the Stock Trader's Almanac has dubbed the "Best Six Months" comes to a close. DJ30 +31.51 NASDAQ -4.34 SP500 +1.64 NASDAQ Dec/Adv/Vol 1670/1302/1.15 bln NYSE Dec/Adv/Vol 1594/1532/866 mln
1:30 pm : More of the same for stocks as the Nasdaq and blue-chip averages continue to trade in opposing directions. The tech-laden Composite continues to lack the leadership from the likes of large-cap names that recently helped carry the Dow and S&P 500 to their best levels of the session.
Bellwethers Amgen (AMGN 64.08 +0.81) and Dell (DELL 25.48 +0.25) are the two exceptions, posting solid gains of 1.3% and 1.0%, respectively. However, they are only being joined by a handful of small and mid-cap stocks (e.g. KLAC +2.0%, NVLS +1.3%, NVDA +1.9%, and VRSN +1.7%) that simply haven't provided enough support to help the market-cap weighted Nasdaq build on its 5.6% April gain. DJ30 +30.94 NASDAQ -4.86 SP500 +1.51 NASDAQ Dec/Adv/Vol 1618/1334/1.08 bln NYSE Dec/Adv/Vol 1598/1560/800 mln
1:00 pm : No real change in the proceedings as traders make their way through the New York lunch hour. The Dow is at its best levels of the day, though, as 17 of its 30 components are now trading higher. Procter & Gamble (PG 64.39 +1.41) still paces the way from a percentage standpoint (+2.2%) as investors price in the possibility of an upside Q3 earnings tomorrow morning.
Strong follow-through momentum in more expensive components like IBM (IBM 102.78 +1.61) and 3M Co. (MMM 82.97 +1.42), though, are making even larger contributions to the price-weighted index's intraday performance and march into record territory. Combined gains from IBM and MMM currently account for 25 Dow points. DJ30 +28.04 NASDAQ -4.29 SP500 +1.52 NASDAQ Dec/Adv/Vol 1646/1274/982 mln NYSE Dec/Adv/Vol 1563/1575/718 mln
12:30 pm : The major averages continue to trade with little conviction on either the bullish or bearish side of the aisle. Meanwhile, Financials (+0.1%) has recently inched back into positive territory, restoring some enough leadership to keep the Dow on pace for its 20th advance in 22 sessions. Citigroup (C 54.43 +1.06) still stands as the Dow's second best performing component (+2.0%).
Nonetheless, with only 10 of its 90 components listed on the Nasdaq, and only two of those (e.g. ETFC, HCBK) posting gains, it's easy to see why the sector's turnaround has had much impact on the largely tech-heavy Composite. DJ30 +24.74 NASDAQ -4.14 SP500 +1.15 NASDAQ Dec/Adv/Vol 1635/1257/880 mln NYSE Dec/Adv/Vol 1630/1473/628 mln
12:00 pm : Stocks are looking a bit fatigued midday as investors weigh good inflation news against worries that the April rally is overdone.
Before the bell, March core PCE, the central bank's favored inflation gauge, was unchanged, bringing the year/year rate back down to 2.1% and within the Fed's forecast range of 2.0% to 2.25% for the year.
However, with the Dow and S&P 500 surging 6.2% and 5.2% in April, respectively, market gains built on a batch of Q1 earnings that are merely beating lowered expectations leaves investors questioning the sustainability of current valuations. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
From a sector standpoint, Consumer Discretionary (-0.4%) has been in focus after RadioShack (RSH 30.02 +2.30) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier has prompted some consolidation among several other retailers. Homebuilders have also been a weak spot after a report earlier showed that private residential construction fell by 1% in March.
On a positive note, Telecom (+0.8%) is turning in a respectable performance, after Dow component Verizon Communications (VZ 38.16 +0.27) matched analysts' forecasts but added 1.7 mln wireless customers in Q1; but the sector's minimal weighting of 3.7% on the S&P 500 has had little overall impact on today's action. DJ30 +9.75 NASDAQ -5.56 SP500 +0.11 NASDAQ Dec/Adv/Vol 1645/1246/782 mln NYSE Dec/Adv/Vol 1608/1474/552 mln
11:30 am : So much for the bulls trying to regain much in the way of upside momentum over the last hour as split sector leadership continues to keep things in check. Financials and Technology still trading in positive territory are helping the S&P 500 inch closer to record levels; but their gains are very modest in scope. In fact, most of the Financials sector is predicated on a 2.0% surge in Citigroup (C 54.41 +1.04), after the Financial Times reported that activist hedge funds may press for Citigroup to be broken up, while Tech is getting its biggest boost from NYSE-listed names like IBM, T, AT, and XRX, which is why the Nasdaq has recently slipped into the red.
The absence of leadership from Health Care, Industrials, and Discretionary remain the big obstacles for the bulls to more convincingly close out what is shaping up to be the best monthly performance for the broader market since October 2003. DJ30 +20.07 NASDAQ -1.67 SP500 +1.87 NASDAQ Dec/Adv/Vol 1597/1253/648 mln NYSE Dec/Adv/Vol 1497/1526/456 mln
11:00 am : Buyers continue to show some resolve on the heels of early consolidation efforts. Telecom (+0.9%) is pacing the way higher, led by a 1.0% in AT&T (T 39.03 +0.39), the only Dow stock in negative territory in April.
Fellow Dow component Verizon Communications (VZ 38.19 +0.30) recently turning positive, though, is the biggest reason behind the market trading at improved levels. Verizon matched analysts' expectations after posting an 8.4% drop in Q1 profits but shareholders are now applauding the fact that VZ added 1.7 mln wireless customers. The Energy sector's ability to shrug of a nearly 1.0% decline in oil prices and turn in the day's second best performance (+0.5%) is also noteworthy. DJ30 +26.68 NASDAQ +1.54 SP500 +2.93 NASDAQ Dec/Adv/Vol 1515/1279/510 mln NYSE Dec/Adv/Vol 1435/1524/342 mln
10:30 am : The major averages are now trading in split fashion, spearheaded by a turnaround in Technology. Cisco Systems (CSCO 27.02 -0.01) lifting off its morning lows (-1.0%) to trade relatively unchanged has acted as one of sector's best sources of recent support.
The hardware group is getting a boost from a 1.7% surge in Dell (DELL 25.65 +0.42), a nearly 1.0% advance in Dow component IBM (IBM 102.12 +0.95), and reports that Apple's (AAPL 100.77 +0.85) share of the worldwide PC market rose slightly in Q1 despite the simultaneous launch of Microsoft's (MSFT 30.10 -0.02) first major OS upgrade in over five years. DJ30 +18.23 NASDAQ -2.74 SP500 +1.64 NASDAQ Dec/Adv/Vol 1629/1085/364 mln NYSE Dec/Adv/Vol 1611/1281/234 mln
10:00 am : The major averages continue to languish below the flat line following disappointing read on regional manufacturing activity. Chicago PMI fell to 52.9% in April from 61.7% in March while the prices paid index rose to 63.2, the highest level in nine months.
However, it is worth noting that stocks were already deteriorating ahead of the report, turning investors' focus to tomorrow's more influential national ISM manufacturing index. DJ30 -5.52 NASDAQ -6.94 SP500 -0.65 NASDAQ Dec/Adv/Vol 1524/1037/168 mln NYSE Dec/Adv/Vol 1416/1245/78 mln
09:40 am : In contrast to what the futures market was signaling, the indices open slightly lower. Evidently good inflation news has not been enough to offset the growing belief that Q1 earnings merely beating lowered expectations don't justify the biggest monthly rally for stocks in more than 3 1/2 years.
Before the bell, March core PCE, the Fed's favored inflation gauge, was unchanged. That brings the year/year rate back down to 2.1%, from 2.4% in February, and is now within the Fed's forecast range of 2.0% to 2.25% for the year. However, with the Dow and S&P 500 up 6.2% and 5.2% in April, respectively, market gains that have outpaced fundamentals leaves investors questioning the sustainability of current valuations. DJ30 -10.24 NASDAQ -6.02 SP500 -1.03 NASDAQ Vol 86 mln NYSE Vol 44 mln
09:15 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +0.5.
09:00 am : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +0.3. Futures indications are off their best levels but still suggest stocks may build on four weeks of gains. Be that as it may, pre-market gains are minimal as the Dow and S&P 500 on pace for their best monthly performances since 2003 leave many with a sense that stocks are overbought at current levels.
The Dow, S&P 500 and Nasdaq are up 6.2%, 5.2%, and 5.6%, respectively, for the month of April as earnings checked in much better than initially feared but leave the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
08:35 am : S&P futures vs fair value: +3.2. Nasdaq futures vs fair value: +3.2. March personal income rose 0.7% (consensus 0.5%) while personal spending rose 0.3% (consensus 0.5%). The more closely watched core-PCE deflator was flat, which assuages inflation concerns as the year-over-year rate drops to 2.1%.
Futures indications have strengthened following the tame inflation data and now point to a stronger start for stocks. Bonds have also improved a bit, pushing the yield on the 10-yr note (+7/32) to 4.66%.
08:00 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +1.0. Early indications are pointing to a slightly higher open for the cash market. The overall tone, however, offers little conviction on the part of buyers as investors remain hesitant to make any concerted bets on stocks amid a lack of notable M&A news and ahead of the 8:30 ET release of March Personal Income and Spending data.
Since the report contains the core-PCE deflator, the Fed's favored inflation gauge, it has the ability to influence monetary policy decisions. Last month the core-PCE number set off inflation alarm bells after rising 0.3%. Today's report is expected to show a rise of only 0.1%, which would push annual growth back down at 2.2% and closer to the Fed's target range of below 2.0%.
http://biz.yahoo.com/mu/update.html
4:20 pm : After turning in such an impressive performance in April, it wasn't surprising to see investors finally start to question whether valuations would be sustainable over the near term, especially with the worst six months of the year [historically] beginning tomorrow.
Before the opening bell sounded, participants were greeted with some encouraging news on the inflation front. March core PCE, the Fed's favored inflation gauge, was unchanged. That brought the year/year rate back down to 2.1% and closer to the Fed's comfort zone of below 2%, which we believe will be reached around mid-year to leave policy makers more room to address any economic concerns with some modest easing.
Be that as it may, with the Dow, S&P 500, and Nasdaq coming into today's action with respective gains of 6.2%, 5.2%, and 5.6% for the month, a rally built on a batch of quarterly earnings results that merely checked in better than lowered expectations offered little incentive for investors to keep forging ahead with the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
Of the nine sectors losing ground, Materials (-1.6%) paced the way lower; but that could be expected since it ranks among this year's best performers.
Consumer Discretionary (-1.3%) was in focus after RadioShack (RSH 29.14 +1.42) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier prompted some consolidation among several other retailers. Homebuilders were another weak spot after a government report showed that private residential construction fell by 1% in March.
Energy turned in the third worst performance today, falling 1.2% in sympathy with a 1.1% decline in crude for June delivery, followed by a 1.0% drop in Technology. Both sectors ranking among April's top three in terms of performance also tempted investors to take some money off the table heading into a seasonally weak period for stocks.
Consumer Staples was in focus following upbeat earnings reports from Wrigley (WWY 58.88 +3.83) and Alberto-Culver (ACV 24.33 +0.98), as well as an analyst upgrade on Colgate-Palmolive (CL 67.76 +0.72). Procter & Gamble (PG 64.51 1.53) and Avon Products (AVP 39.86 +0.35) running up ahead of their Tuesday-morning reports also provided a floor of support throughout most of the day. Nonetheless, not even the proclivity of the sector to outperform during periods of uncertainty or an economic slowdown was enough to keep it in positive territory.
Telecom was the only sector to finish higher Monday, as Verizon Communications (VZ 38.18 +0.29) matched analysts' forecasts but added 1.7 mln wireless customers in Q1. Telecom was also the only sector that failed to partake in the April rally, closing out the month flat versus April gains of more than 4% on average for the remaining nine economic sectors. BTK -1.6% DJ30 -58.03 DJTA -1.7% DJUA -1.0% DOT -1.0% NASDAQ -32.12 NQ100 -1.2% R2K -1.8% SOX -1.2% SP400 -1.4% SP500 -11.70 XOI -1.0% NASDAQ Dec/Adv/Vol 2172/895/2.03 bln NYSE Dec/Adv/Vol 2379/910/1.50 bln
3:30 pm : Even though losses on the blue-chip averages remain modest in scope, selling remains the name of game going into the close. As a reminder, April has been the best month for the Dow since 1950, averaging a 1.8% return, according to the Stock Trader's Almanac.
This April, though, the Dow has soared more than 6% and has been accompanied by strong gains among several of its counterparts. The S&P 500 and Nasdaq are currently turning in the worst performances among the majors, as 8 of 10 economic sectors are now negative, but are still up more than 4% this month as investors lock in profits among many of April's winners and begin to fret about the two-decade old axiom "sell in May and go away." DJ30 -9.10 NASDAQ -22.58 SP500 -5.93 NASDAQ Dec/Adv/Vol 2095/928/1.65 bln NYSE Dec/Adv/Vol 2181/1064/1.22 bln
3:00 pm : The major averages continue to deteriorate as the Dow becomes the latest index to turn negative. The latter's reversal shouldn't come as a big shock since it has posted gains in 19 of the last 21 sessions and closed out the week last Friday with its third straight record.
The Dow is also up more than 6% in April, on pace for its best monthly performance since December 2003, with its continued charge being buoyed by large gains in only a handful of its blue-chip components. The same can be said for today as the gains it enjoyed earlier were being generated from just five components (e.g. C +1.6%, IBM +1.4%, MMM +2.0%, PG +2.5%, VZ +1.2%). DJ30 -1.81 NASDAQ -20.84 SP500 -4.18 NASDAQ Dec/Adv/Vol 2015/986/1.44 bln NYSE Dec/Adv/Vol 1966/1238/1.06 bln
2:30 pm : The indices finally break out of their recent trading ranges; but to the dismay of the bulls, the market's latest move has been to the downside. The renewed wave of selling interest within the last 20 minutes leaves all three major averages at afternoon lows, with a reversal in the Energy sector alongside a sell-off in oil prices (-1.0%) pushing the S&P 500 back into negative territory.
With the Tech sector also turning negative, it's not surprising to see the Nasdaq get hit even harder; but its intraday decline still leaves the Composite's April advance above 5%. DJ30 +17.88 NASDAQ -11.66 SP500 -0.88 NASDAQ Dec/Adv/Vol 1654/1307/1.24 bln NYSE Dec/Adv/Vol 1648/1549/940 mln
2:00 pm : Not much has changed over the last two hours as the indices continue to trade in a narrow range around the unchanged mark. The market's holding pattern has been further evidenced in the A/D line, as advancers and decliners on the NYSE remain evenly matched while declining issues on the Nasdaq hold a slim 16-to-13 advantage over advancing issues.
A similar ratio of up to down volumes paints a similarly mixed picture at the Big Board and the Composite as the sustainability of such an impressive April performance on all three major averages remains in question, especially as what the Stock Trader's Almanac has dubbed the "Best Six Months" comes to a close. DJ30 +31.51 NASDAQ -4.34 SP500 +1.64 NASDAQ Dec/Adv/Vol 1670/1302/1.15 bln NYSE Dec/Adv/Vol 1594/1532/866 mln
1:30 pm : More of the same for stocks as the Nasdaq and blue-chip averages continue to trade in opposing directions. The tech-laden Composite continues to lack the leadership from the likes of large-cap names that recently helped carry the Dow and S&P 500 to their best levels of the session.
Bellwethers Amgen (AMGN 64.08 +0.81) and Dell (DELL 25.48 +0.25) are the two exceptions, posting solid gains of 1.3% and 1.0%, respectively. However, they are only being joined by a handful of small and mid-cap stocks (e.g. KLAC +2.0%, NVLS +1.3%, NVDA +1.9%, and VRSN +1.7%) that simply haven't provided enough support to help the market-cap weighted Nasdaq build on its 5.6% April gain. DJ30 +30.94 NASDAQ -4.86 SP500 +1.51 NASDAQ Dec/Adv/Vol 1618/1334/1.08 bln NYSE Dec/Adv/Vol 1598/1560/800 mln
1:00 pm : No real change in the proceedings as traders make their way through the New York lunch hour. The Dow is at its best levels of the day, though, as 17 of its 30 components are now trading higher. Procter & Gamble (PG 64.39 +1.41) still paces the way from a percentage standpoint (+2.2%) as investors price in the possibility of an upside Q3 earnings tomorrow morning.
Strong follow-through momentum in more expensive components like IBM (IBM 102.78 +1.61) and 3M Co. (MMM 82.97 +1.42), though, are making even larger contributions to the price-weighted index's intraday performance and march into record territory. Combined gains from IBM and MMM currently account for 25 Dow points. DJ30 +28.04 NASDAQ -4.29 SP500 +1.52 NASDAQ Dec/Adv/Vol 1646/1274/982 mln NYSE Dec/Adv/Vol 1563/1575/718 mln
12:30 pm : The major averages continue to trade with little conviction on either the bullish or bearish side of the aisle. Meanwhile, Financials (+0.1%) has recently inched back into positive territory, restoring some enough leadership to keep the Dow on pace for its 20th advance in 22 sessions. Citigroup (C 54.43 +1.06) still stands as the Dow's second best performing component (+2.0%).
Nonetheless, with only 10 of its 90 components listed on the Nasdaq, and only two of those (e.g. ETFC, HCBK) posting gains, it's easy to see why the sector's turnaround has had much impact on the largely tech-heavy Composite. DJ30 +24.74 NASDAQ -4.14 SP500 +1.15 NASDAQ Dec/Adv/Vol 1635/1257/880 mln NYSE Dec/Adv/Vol 1630/1473/628 mln
12:00 pm : Stocks are looking a bit fatigued midday as investors weigh good inflation news against worries that the April rally is overdone.
Before the bell, March core PCE, the central bank's favored inflation gauge, was unchanged, bringing the year/year rate back down to 2.1% and within the Fed's forecast range of 2.0% to 2.25% for the year.
However, with the Dow and S&P 500 surging 6.2% and 5.2% in April, respectively, market gains built on a batch of Q1 earnings that are merely beating lowered expectations leaves investors questioning the sustainability of current valuations. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
From a sector standpoint, Consumer Discretionary (-0.4%) has been in focus after RadioShack (RSH 30.02 +2.30) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier has prompted some consolidation among several other retailers. Homebuilders have also been a weak spot after a report earlier showed that private residential construction fell by 1% in March.
On a positive note, Telecom (+0.8%) is turning in a respectable performance, after Dow component Verizon Communications (VZ 38.16 +0.27) matched analysts' forecasts but added 1.7 mln wireless customers in Q1; but the sector's minimal weighting of 3.7% on the S&P 500 has had little overall impact on today's action. DJ30 +9.75 NASDAQ -5.56 SP500 +0.11 NASDAQ Dec/Adv/Vol 1645/1246/782 mln NYSE Dec/Adv/Vol 1608/1474/552 mln
11:30 am : So much for the bulls trying to regain much in the way of upside momentum over the last hour as split sector leadership continues to keep things in check. Financials and Technology still trading in positive territory are helping the S&P 500 inch closer to record levels; but their gains are very modest in scope. In fact, most of the Financials sector is predicated on a 2.0% surge in Citigroup (C 54.41 +1.04), after the Financial Times reported that activist hedge funds may press for Citigroup to be broken up, while Tech is getting its biggest boost from NYSE-listed names like IBM, T, AT, and XRX, which is why the Nasdaq has recently slipped into the red.
The absence of leadership from Health Care, Industrials, and Discretionary remain the big obstacles for the bulls to more convincingly close out what is shaping up to be the best monthly performance for the broader market since October 2003. DJ30 +20.07 NASDAQ -1.67 SP500 +1.87 NASDAQ Dec/Adv/Vol 1597/1253/648 mln NYSE Dec/Adv/Vol 1497/1526/456 mln
11:00 am : Buyers continue to show some resolve on the heels of early consolidation efforts. Telecom (+0.9%) is pacing the way higher, led by a 1.0% in AT&T (T 39.03 +0.39), the only Dow stock in negative territory in April.
Fellow Dow component Verizon Communications (VZ 38.19 +0.30) recently turning positive, though, is the biggest reason behind the market trading at improved levels. Verizon matched analysts' expectations after posting an 8.4% drop in Q1 profits but shareholders are now applauding the fact that VZ added 1.7 mln wireless customers. The Energy sector's ability to shrug of a nearly 1.0% decline in oil prices and turn in the day's second best performance (+0.5%) is also noteworthy. DJ30 +26.68 NASDAQ +1.54 SP500 +2.93 NASDAQ Dec/Adv/Vol 1515/1279/510 mln NYSE Dec/Adv/Vol 1435/1524/342 mln
10:30 am : The major averages are now trading in split fashion, spearheaded by a turnaround in Technology. Cisco Systems (CSCO 27.02 -0.01) lifting off its morning lows (-1.0%) to trade relatively unchanged has acted as one of sector's best sources of recent support.
The hardware group is getting a boost from a 1.7% surge in Dell (DELL 25.65 +0.42), a nearly 1.0% advance in Dow component IBM (IBM 102.12 +0.95), and reports that Apple's (AAPL 100.77 +0.85) share of the worldwide PC market rose slightly in Q1 despite the simultaneous launch of Microsoft's (MSFT 30.10 -0.02) first major OS upgrade in over five years. DJ30 +18.23 NASDAQ -2.74 SP500 +1.64 NASDAQ Dec/Adv/Vol 1629/1085/364 mln NYSE Dec/Adv/Vol 1611/1281/234 mln
10:00 am : The major averages continue to languish below the flat line following disappointing read on regional manufacturing activity. Chicago PMI fell to 52.9% in April from 61.7% in March while the prices paid index rose to 63.2, the highest level in nine months.
However, it is worth noting that stocks were already deteriorating ahead of the report, turning investors' focus to tomorrow's more influential national ISM manufacturing index. DJ30 -5.52 NASDAQ -6.94 SP500 -0.65 NASDAQ Dec/Adv/Vol 1524/1037/168 mln NYSE Dec/Adv/Vol 1416/1245/78 mln
09:40 am : In contrast to what the futures market was signaling, the indices open slightly lower. Evidently good inflation news has not been enough to offset the growing belief that Q1 earnings merely beating lowered expectations don't justify the biggest monthly rally for stocks in more than 3 1/2 years.
Before the bell, March core PCE, the Fed's favored inflation gauge, was unchanged. That brings the year/year rate back down to 2.1%, from 2.4% in February, and is now within the Fed's forecast range of 2.0% to 2.25% for the year. However, with the Dow and S&P 500 up 6.2% and 5.2% in April, respectively, market gains that have outpaced fundamentals leaves investors questioning the sustainability of current valuations. DJ30 -10.24 NASDAQ -6.02 SP500 -1.03 NASDAQ Vol 86 mln NYSE Vol 44 mln
09:15 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +0.5.
09:00 am : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +0.3. Futures indications are off their best levels but still suggest stocks may build on four weeks of gains. Be that as it may, pre-market gains are minimal as the Dow and S&P 500 on pace for their best monthly performances since 2003 leave many with a sense that stocks are overbought at current levels.
The Dow, S&P 500 and Nasdaq are up 6.2%, 5.2%, and 5.6%, respectively, for the month of April as earnings checked in much better than initially feared but leave the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.
08:35 am : S&P futures vs fair value: +3.2. Nasdaq futures vs fair value: +3.2. March personal income rose 0.7% (consensus 0.5%) while personal spending rose 0.3% (consensus 0.5%). The more closely watched core-PCE deflator was flat, which assuages inflation concerns as the year-over-year rate drops to 2.1%.
Futures indications have strengthened following the tame inflation data and now point to a stronger start for stocks. Bonds have also improved a bit, pushing the yield on the 10-yr note (+7/32) to 4.66%.
08:00 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +1.0. Early indications are pointing to a slightly higher open for the cash market. The overall tone, however, offers little conviction on the part of buyers as investors remain hesitant to make any concerted bets on stocks amid a lack of notable M&A news and ahead of the 8:30 ET release of March Personal Income and Spending data.
Since the report contains the core-PCE deflator, the Fed's favored inflation gauge, it has the ability to influence monetary policy decisions. Last month the core-PCE number set off inflation alarm bells after rising 0.3%. Today's report is expected to show a rise of only 0.1%, which would push annual growth back down at 2.2% and closer to the Fed's target range of below 2.0%.
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