Stocks had a nice up-day today.
First, the scoreboard:
- Dow: 16,543.0 (+10.0, +0.0%)
- S&P 500: 1,892.5 (+4.4, 0.2%)
- Nasdaq: 4,154.3, (+22.8, +0.5%)
And now the top stories:
- At around 3:30 p.m. ET, Bloomberg spotted a partial release of Hewlett Packard’s Q2 financial results, which were scheduled to be released after the closing bell today. According to Bloomberg, the company saw revenue of $US27.3 billion versus expectations for $US27.4 billion. Earnings came right in line with analysts’ expectations at $US0.88 per share. The company reportedly said it would increase the number of job cuts by 11,000 to 16,000, which would be on top of the 34,000 already announced. Traders’ initial reaction was to sell the stock, which went from green to closing down 1.5% for the day.
- The stage for today’s trading action was set by a series of May manufacturing reports from around the world. Overnight, we learned that China’s Flash PMI climbed to a five-month high of 49.7 in May, beating expectations for a 48.3 print. Germany reported that its composite output index rested comfortably at 56.1 in May, which was a bit higher than the 56.0 expected by economists. France, however, unexpectedly signaled that its economy may be contracting. Its composite output index tumbled to a three-month low of 49.3 in May, which was much worse than the 50.5 expected by economists. “Of greatest concern is France, living up to its moniker of ‘sick man of Europe’ by sliding back into contraction as Germany continues to enjoy robust growth and the rest of the region experiences its best expansion since mid-2007,” said Markit’s Chris Williamson.
- The U.S. composite PMI climbed to 56.2 in May from 55.4 in April. Economists were looking for a reading of 55.5. “The US manufacturing sector continued to gain strength heading into mid-year as supportive demand conditions led to the sharpest month-on-month increase in production for over three years,” said Markit’s Pauls Smith. “This provides further confirmation that industry will aid a rebound in U.S. GDP in the second quarter, and other indicators from the survey suggest that the sector has plenty of momentum heading into the summer and beyond.”
- Initial weekly jobless claims jumped to 326,000 from 298,000 a week ago. This was a bit higher than the 310,000 expected by economists. “This is superficially disappointing but the seasonal adjustment for last week’s very low number was always a bit suspect,” said Pantheon Macroeconomics’ Ian Shepherdson. “Taking the two weeks together, though, claims have averaged 314K, well below the pre-Easter trend.”
- Existing home sales climbed 1.3% month-over-month to an annualized pace of 4.65 million units. Economists were looking for a 4.69 million level. “Recent trends have not shown much of a drop-off from previous months and, in our view, are consistent with a rebound in housing as opposed to concerns from some FOMC participants about a flattening out in housing activity,” said Barclays’ Michael Gapen.
- Before markets opened today, Best Buy announced Q1 financial results that were stronger than expected. Adjusted earnings climbed to $US0.33, which was much stronger than the $US0.19 expected. “As we look forward to the second and third quarters, we are expecting to see ongoing industry-wide sales declines in many of the consumer electronics categories in which we compete,” warned CFO Sharon McCollam. “We are also expecting ongoing softness in the mobile phone category as consumers eagerly await highly-anticipated new product launches. Consequently, absent any major product launches, we are expecting comparable sales to be negative in the low-single digits in both the second and third quarters.”
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