Intraday Market Update
Shares of Goldman Sachs are off by -9% in mid-day trading after the Wall Street Journal reported the US attorney's office in Manhattan is undertaking a preliminary criminal probe related to mortgage trading at the firm. The WSJ article cites that no firm in the last 200 years has ever survived criminal charges. Many shares at leading US banks are under pressure on the news. More statements out of key players in Europe indicate that a revised Greece aid package will be agreed upon over the weekend. European finance ministers will discuss the package at a conference on Sunday, with various estimates about the size of the new backstop ranging around 130 billion Euros.
All of the indices are under pressure this morning being led by large cap techs. The NASDAQ 100 is lower by -1.4%. The DJIA is off by -78 points (-.68%) and the S&P 500 is lower by about -11 points (-.94%).
The economic calendar was fairly active this morning with GDP, Chicago PMI, and Consumer Sentiment making headlines. Growth in overall GDP (output) slowed from the fourth quarter, but the big news is that the domestic final demand component picked up significantly. Real GDP growth for the first quarter came in at an annualized 3.2%, following a fourth quarter surge of 5.6%. Analysts had expected a first quarter gain of 3.4%.
The Chicago PMI report indicates that business is accelerating in the Chicago area. The composite index rose +5 points to 63.8 in April. Any reading over 50 indicates month-to-month growth and the higher the reading over 50 the faster the growth. The strength was in new orders which rose more than +3 points to a very strong 65.2. Production follows new orders which were already strong at 63.1 for more than a +2.5 point gain. Increased production means increased demand for workers so the employment numbers were probably the best news of the report. Employment jumped more than +4 points to 57.2 which indicates that Chicago businesses are hiring. Backlogs were up more than +7 points to 61.4, pointing to the need for labor and additional hiring ahead.
Consumer sentiment fell to 72.2 in April, from 73.6 in March, but beat expectations. Analysts were expecting a reading 71 for April. The director of the survey said "confidence in the economic policies and legislation by the Obama administration remained at low levels, although confidence did record a small rebound in late April."
In equities, Number two US oil producer Chevron offered strong earnings and weak revenue results this morning. Executives said that profits benefitted from higher prices and higher production levels. Shares of CVX are about breakeven. Refiner Sunoco crushed analyst's expectations by reporting a healthy profit against expectations for a small loss. Sunoco's competitor Tesoro reported losses that were bigger than projected. SUN in up +3% while TSO is off by -1.7%.
Semiconductor name MEMC Electronics (WFR) is off more than -18% after reporting a loss instead of a small profit as expected. WFR also guided well below expectations for next quarter. Other semi names are getting hit by the lousy report from WFR, with ETF SMH down more than -3%. Computer security name McAfee is down almost -12% after missing their earnings and revenue and guiding well below expectations. Wynn is well off its highs despite crushing earnings yesterday after the close. Wynn and other casino names are suffering after China said it would curb internet gambling.
Commodities are mixed with no big winners or losers. Front month crude is below $86.00 per barrel (+.50%). Natural gas is another -1% after getting crushed yesterday. Gold is up +1.00% to about $1,180 per ounce, silver is also higher by +0.40%, and copper is higher by +0.50% after being under pressure all week.
Once again markets throughout the world were mixed on Friday. The Asia-Pacific region was mostly positive while the European region was mostly negative. Leading the gains in Asia were Honk Kong (+1.59%), Japan (+1.21%), and Korea (+0.76%). Australia tacked on +0.46% while China was about breakeven.
Most major European markets declined, but not by much. Notable losers were London (-1.05%) and France (-0.62%), while Spain was the lone winner gaining (+0.31%).
Core Sector List:
Overall reading: 13 sectors declining 3 sectors advancing.
Strongest Sectors: Gold Miners, Utilities, Home Construction
Weakest Sectors: Semiconductors, Oil Services, Software
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