MARKETS SNAPSHOT FOR 27/04/12
Saturday, 28 April 2012 | 00:00
DJ30 PointChange: +23.69 Level: 13228.31 NASDAQ PointChange: +18.59 Level: 3069.2 NQ100 PercentChange: +0.6 R2K PercentChange: +0.9 SP400 PercentChange: +0.5 SP500 PointChange: +3.38 Level: 1403.36 NASDAQ-Adv:1635 Dec: 867 NYSE-Adv:2012 Dec: 978
[BRIEFING.COM] Trade this week started on a soft note, but stocks were able to rebound for four consecutive gains that too, the S&P 500 back above 1400 for a 1.8% weekly gain. That stands as the best weekly performance for the broad market measure in six weeks.
Overall action was relatively quiet on Friday as market participants shrugged off news that analysts at S&P issued another downgrade of Spain's debt, which now sits at BBB+. There was also a relatively muted response to an advance reading of first quarter GDP that suggested the economy grew 2.2%, which is less than the 2.5% rate that had been expected, on average, among economists polled by Briefing.com. Some pundits point out that even though the growth rate was weaker than what had been widely anticipated, it wasn't so poor as to rekindle calls for further quantitative easing, although the dollar did lose ground against competing currencies today.
Consumer Discretionary stocks led for virtually the entire day. The sector's 1.3% gain today came with help from Amazon.com (AMZN 226.85, +30.86), which rallied to a 2012 high in response to earnings that easily exceeded what had been widely expected. A handful of analyst upgrades helped the case for shares of the internet-based retailer. Expedia (EXPE 40.31, +7.68) benefited from a similar response on the back of its better-than-expected report. For the week, Consumer Discretionary advanced 2.8%.
Typical leaders Tech, Financials, and Energy all lagged. As such, they finished the session at the flat line. For the week, Tech advanced 2.4%. Although it was hampered on Friday by a sharp drop in shares of Western Digital (WDC 37.93, -6.17), which plunged when disappointing commentary from management cast a pall of what was otherwise a strong quarterly report, earlier in the week shares of Apple (AAPL 603.00, -4.70) rallied hard to lift the Tech sector after the company had reported another thoroughly impressive quarterly report. Interestingly, shares of AAPL had suffered in the prior session because of concern about a decline in the number of products it has had hooked up to data networks. Meanwhile, both Financials and Energy booked weekly gains on the order of 2%. On Friday Energy giant Chevron (CVX 106.20, -0.02) reported earnings that exceeded what had been expected, contrasting the earnings miss that Exxon Mobil (XOM 86.08, +0.01) posted earlier in the week.
Softness at the start of the week came in response to news that China's latest manufacturing reading still pointed to tighter activity, despite its improvement from the prior month. Manufacturing readings from both Germany and France were also disappointing. France further stoked eurozone concerns because reports suggested that the country may experience a political shakeup, which could carry implications for fiscal and financial reform there. Additionally, failure by fellow eurozone member Netherlands to agree on a budget evoked the threat of a change in leadership there.
Things firmed up after the S&P 500 was able to find support at its monthly closing low of 1358, which is also only a single point above its monthly intraday low of 1357. Stocks began their rebound from there.
The Fed was busy this week as the FOMC surprised few by keeping its fed funds rate at 0.00% to 0.25%, and noting that it anticipates exceptionally low levels of the fed funds rate at least through late 2014. Although it was acknowledged that inflation has picked up somewhat, the outlook for inflation over the medium run remains subdued. In fact, the Fed forecasted that inflation for the next couple of years will not surpass 2.0%.
The Fed added 20 basis points to both ends of its forecast for 2012 real GDP so that the range is now from 2.4% and 2.9%, but the forecast for 2013 was trimmed by 10 basis points to range from 2.7% to 3.1%. Longer run growth is still expected to range from 2.3% to 2.6%.
In a follow-up to the FOMC statement and forecast, Fed Chairman Bernanke held a press conference, during which he stated that the FOMC is prepared to take additional actions, if necessary. That was widely regarded by many market participants as a tacit sign that further quantitative easing is not off of the table.
Leading up to the GDP report on Friday morning, participants digested several important pieces of data, including news that new home sales for March hit an annualized pace of 328,000, which is greater than the clip of 318,000 that had been broadly anticipated. Moreover, prior month numbers were revised upward to reflect an annualized pace of 353,000. Pending home sales reportedly spiked in March by 4.1%, which is far greater than the 0.5% increase that economists polled by Briefing.com had generally expected.
The Consumer Confidence Index for April eased back to 69.2 from 70.2 in the prior month, but on Friday it was reported that the final Consumer Sentiment Survey for April from the University of Michigan improved to 76.4 from the preliminary reading of 75.7.
Total durable goods orders dropped in Mach by 4.2%, which is steeper than the 1.7% decline that had been broadly expected. Prior month numbers were revised lower to reflect an increase of 1.9%. Excluding transportation items, durable goods orders declined in March by 1.1%, which comes in stark contrast with the 0.5% increase that had been broadly anticipated. Orders less transportation for the prior month had increased by an upwardly revised 1.9%.
Weekly initial jobless claims totaled 388,000, which is greater than the 373,000 claims that economists polled by Briefing.com had generally expected. The prior week tally was 389,000 claims.