Stocks slid into the close, reversing earlier gains in trading as the Nasdaq fell back below the 5,000 level and the S&P 500 fell below 2,100.
First, the scoreboard:
- Dow: 18,021.9, -04, (-0.5%)
- S&P 500: 2,092.4, -12, (-0.6%)
- Nasdaq: 4,995.9, -15, (-0.3%)
And now, the top stories:
- In economic data out Tuesday, new home sales unexpectedly surged in February, rising 7.8% to an annualized pace of 539,000. Expectations were for sales to fall 3.5% after a 0.2% decline in January.
- The flash reading of manufacturing activity for February from Markit Economics also beat forecasts, coming in at 55.3, versus the expectation of a 54.6 print; any reading above 50 indicates expansion, sub-50 readings indicate contraction. But the Richmond Fed manufacturing index missed, plunging to -8 in March from 0 in February — worse than the +3 expected by economists.
- Inflation data came in roughly in line with expectations. Consumer prices rose 0.2% last month and were flat year-over-year; economists had forecast a 0.2% reading for the month and a 0.1% slump year-over-year. “Core” prices rose 0.2% month-over-month and 1.7% compared to the prior year, matching forecasts. In a note to clients after the release, Ian Shepherdson at Pantheon Macro said: “In one line: Core inflation stable, though likely will dip over the next few months … We still think the stronger dollar and pass-through from falling gas prices will push core inflation down over the next couple of quarters.”
- The big company news Tuesday was that former Morgan Stanley CFO Ruth Porat is moving to Silicon Alley to join Google in the same position, effective May 26. Porat has been called the most powerful woman on Wall Street. And as Julia la Roche notes, she probably would have been the first female CEO on Wall Street. Porat joins Google in the midst of growing concern about the company’s slowing ad revenues, according to Business Insider’s Jillian D’Onfro. “I’m delighted to be returning to my California roots and joining Google,” Porat said in a statement.
- Shares of Whiting Petroleum fell by as much as 20% after the company priced its sale of common stock, although investors had thought it was up for sale. But on Monday, the company announced plans to issue $US1.75 billion in debt and 35 million shares of common stock. This effectively dilutes (or reduces) the return shareholders get from the company’s earnings, because the company has sold more stocks. Whiting shares have fallen over 45% in the last year because of the oil crash.
- Shares of tech company Sonus tumbled by up to 33% after it announced that this quarter, it will not receive as many orders as it had expected. The company offers secure communications solutions like Voice over IP to large companies, and AT&T is one of its largest clients. Sonus lowered its revenue guidance for the year to $US47 million-$US50 million compared to previous guidance of $US74 million, and will give details of a cost reduction plan next month.
- Teva Pharmaceuticals recently made a few big hires, and Citi says that could suggest a mega merger is on the way. “A material, potentially transformative, transaction, is not off the table for TEVA,” Citi’s Liav Abrahams wrote Monday, after Teva announced Timothy Wright as its new head of business development, effective April 13. There’ve been rumours that Teva is interested in acquiring Mylan, another pharmaceutical, which would make it the world’s largest generics company.
- It’s too soon to call the top in stocks, according to Stifel’s Barry Bannister, who has a target of 2,350 on the S&P 500. In a note Monday, he wrote: “Though we continue to see flat S&P 500 EPS in 2015 due to energy and dollar effects, we have not seen the complacency, euphoria or interest rates we associate with market tops, and we expect a late bull market P/E expansion to lift the index to our 2,350 target price.”
- Half of America doesn’t save, according to a chart from Deutsche Bank’s Torsten Sløk. As Business Insider’s Shane Ferro explains, “people who don’t save won’t have any buffer should the economy turn and they lose their jobs. Longer term, people who don’t save won’t have the capacity to retire.”
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