Intraday Market Update
Stocks in the US have regained most of their losses from Friday on the heels of the strongest ISM Manufacturing Index reading since June 2004 at 60.4. An ISM spokesman said there was no reason gains in the key index should not continue, although he also warned that the inventory correction could end in June. Good news also came from the Commerce Department as they reported personal spending rose +0.6% in March which is the biggest increase in six months. Spending grew by nearly double the amount that incomes increased which begs the questions about the sustainability of a consumer comeback.
European countries agreed to a 110 billion euro ($146.5 billion) aid package for Greece which is the biggest ever financial bailout of a country. The agreement provided relief to US markets, but in the currency market investors appear to be concerned whether Germany can secure parliamentary approval to release the money by a mid-May deadline, putting pressure on the euro.
In equities, Goldman Sachs has rebounded (+3.37%) after Friday's shellacking as Warren Buffet, who invested $5 billion in the firm in 2008, defended the bank and said the company shouldn't be blamed for losses in its sub-prime mortgage dealings, which are at the center of the fraud case against the firm. Shares of BP are off another -8% as criticism of the company over the Gulf of Mexico oil spill continues to gain steam. Real Estate Investment Trust, The St. Joe Co., has lost about -15% since Friday because of the company's substantial exposure to shorefront real estate holdings in the Florida panhandle that could be impacted by the oil spill.
The boards of United Airlines and Continental have agreed to a merger creating the world's biggest airline. The new entity will be 55% owned by United shareholders and 45% by Continental shareholders, with each Continental share exchanged for 1.05 United shares in an at-the-market stock swap. Dollar Thrifty is up a +14.5% after Avis said it is ready to increase its offer for the rental car company following Hertz's improved $41/shr offer for Dollar last week.
In earnings news, Loews, Arrow Electronics, Sysco and CNA Financial all beat earnings expectations. Shares of Loews spiked higher but are now about breakeven. Arrow is up +4.4% after increasing guidance in Q2. CNA is up +3.1%, while and SYY is down -1%.
Commodities are mostly higher with the exception of copper which is down -1.61%. Front month crude is trading at $86.77 per barrel (+0.72%). Natural gas is higher by +1.75% after getting crushed last week. Gold is slightly higher to $1,183 per ounce and silver is higher by +1.13%.
Markets in the Asia-Pacific region were mixed. Exchanges in China and Japan were closed. Declines were experienced in Honk Kong (-1.41%), Korea (-1.17%), and Australia (-0.46%).
European markets were mostly higher. Notable winners were in Germany (+0.51%) and France (-0.62%), while Spain was the only decliner (-0.66%). The London exchange was closed.
Core Sector List:
Overall reading: 13 sectors advancing, 3 sectors declining.
Strongest Sectors: Semiconductors, Home Construction, Transportation
Weakest Sectors:, Gold Miners, Oil Services, Oil
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