REUTERS/Sue OgrockiA trader pauses amidst the activity in the S&P 500 pit at the Chicago Mercantile Exchange.
Today’s positive close belies a huge swing we saw in the high-growth tech stocks. The Dow was down by as much as 110 points before coming back.
First, the scoreboard:
- Dow: 16,262.5 (+89.3, +0.5%)
- S&P 500: 1,842.9 (+12.3, +0.6%)
- Nasdaq: 4,034.1, (+11.4, +0.2%)
And now the top stories:
- The tech-heavy Nasdaq was down by as much as 2.1% before recovering all of its losses. Among the laggards were the dotcom stocks like GrubHub, King Digital, Zynga, Facebook, and Yelp. First Solar and Netflix also underperformed. This appears to be the continuation of the “internal correction,” which is seeing investors rotate out of high-priced growth stocks and into cheaply-priced value stocks.
- Inflation unexpectedly accelerated in March. According to the BLS, the consumer price index climbed by 0.2% month over month, which was ahead of the 0.1% expected. “The headline index was boosted by a 0.4% advance in food prices from the previous month in March despite a 0.1% drop in energy prices,” observed BI’s Matthew Boesler. “The core index was bolstered by housing prices, which make up about 40% of all consumer prices, rising 2.8% from a year earlier — the fastest yearly gain since March 2008.”
- The NAHB’s homebuilder sentiment index climbed to just 47 in April from 46 in March. Economists were looking for a reading of 49. “Job growth is proceeding at a solid pace, mortgage interest rates remain historically low and home prices are affordable,” said NAHB Chief Economist David Crowe. “While these factors point to a gradual improvement in housing demand, headwinds that are holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor.”
- The Empire State Manufacturing survey’s headline activity index unexpectedly fell to 1.29 in April from 5.61 in March. “While the overall weaker tone suggests a soft start for manufacturing activity in the New York region at the beginning of Q2, the broader trend is suggestive of generally stable conditions for output and manufacturing in the past year or so, consistent with continued modest expansion,” said Barclays’ Peter Newland.
- Earnings season is underway. Coca-Cola announced earnings and revenue that were in line with expectations. But the financial results reminded us of the perils of operating in the global economy. “Based on recent changes to the Venezuelan currency exchange rate mechanisms, we changed the exchange rate we used to remeasure our Venezuelan subsidiary’s financial statements into U.S. dollars,” said management. “During the first quarter, the Company recorded charges of $247 million related to the devaluation of the Venezuelan bolivar.” That’s no small amount of money. Then again, that’s in the context of Coca-Cola’s $10.5 billion in sales and $1.6 billion in net income during the quarter.
- Yahoo announced its Q1 earnings after the closing bell, and they were nicely upbeat.
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