Reply #127: Closing Numbers and Blather [View All]

[RawMaterials]

Dow 10403.93 -104.04 (-0.99%)
Nasdaq 1974.37 -31.03 (-1.55%)
S&P 500 1173.79 -13.97 (-1.18%)
10-Yr Bond 4.374% +0.14

NYSE Volume 2,019,222,000
Nasdaq Volume 1,703,409,000


Close: Widespread selling, sparked by higher bond yields, disappointing retail sales data and downside guidance, closed virtually every sector in negative territory, as all the major indices lost at least 1.0%... Volatility in Treasurys again played havoc with market sentiment, except today's arguably modest swings in bonds to the downside more than erased yesterday's late-day rally in equities, which was ignited primarily by just the opposite - a bond swing to the upside...

Today, bonds initially found modest buying interest, following weaker than expected March retail sales data, but meager indirect bidder participation (28.2%) in today's $15 bln 5-year note auction knocked the benchmark 10-year note (-8/32) to session lows and yields to their highs of the day (4.38%), further strengthening a negative tone first ignited by the poor retail sales figures... The 10-year note eventually closed down 5 ticks to yield 4.37%... March retail sales rose 0.3%, but checked in well below expectations of 0.8%, while the retail sales excluding autos grew just 0.1%, also below forecasts (+0.5%), following a revised 0.6% rise a month earlier...

While the weaker than expected March data may raise doubts about the trend in consumer spending, the numbers are not expected to greatly alter Q1 GDP estimates, which currently stand at about 3 1/2%... Also weighing on the markets was an earnings warning from Harley-Davidson (HDI 48.79 -9.98), which actually beat Q1 estimates by a penny, as well as downside guidance from the likes of Compuware (CPWR 5.95 -0.86) and Foundry Networks (FDRY 8.99 -0.46), which trumped upside Q1 guidance from Merck (MRK 34.58 +0.77) and McDonalds (MCD 31.27 +0.37)... Nine out of 10 economic sectors closed lower...

Pacing the way to the downside was the Materials sector (-2.7%), amid widespread weakness in Steel, Aluminum and Paper... Energy (-2.3%) was not far behind, as oil prices fell 3.2% to a 7-week low... Crude oil futures ($50.22/bbl -$1.64) extended yesterday's 3.4% sell off, amid better than expected builds of 3.6 mln barrels (consensus 400K) and 800K barrels (analysts expected levels to remain unchanged) in crude oil supplies and gasoline inventories, respectively... Falling oil prices, however, failed to lift overall sentiment due to the growing emphasis being placed on economic data, bond yields and upcoming corporate earnings growth...

Financial (-1.4%), Consumer Discretionary (-1.4%), Industrials (-1.5%) and Technology (-1.7%) were also an influential leaders losing ground... Pacing losses in technology was Semiconductor (-2.7%), which was weak after ASML Holding (ASML 15.31 -1.00) forecasted a decline in Q2 orders and following a report that showed global sales of chip equipment fell 2.5% in Feb. - the first such decline in 19 months...

Weakness in shares of Apple Computer (AAPL 41.35 -1.31), ahead of its Q1 earnings report after the close, dragged Hardware (-1.3%) down while every other sub-sector showed losses in excess of 1.0%... Health Care (+0.5%), however, was the lone bright spot of the day, getting a boost from Merck's upside Q1 guidance and optimism that a U.S. District Court's long awaited decision may show that the patent on Eli Lilly's (LLY 55.38 +1.56) drug Zyprexa is valid and that challenges brought by generic drug makers are without merit...DJTA -2.7, DJUA -0.7, DOT -1.6, Nasdaq 100 -1.9, Russell 2000 -1.6, SOX -2.7, S&P Midcap 400 -1.4, XOI -2.2, NYSE Adv/Dec 969/2328, Nasdaq Adv/Dec 883/2198