Indices
S&P 500 1,310.61 -.05%
DJIA 11,367.14 +.17%
NASDAQ 2,322.57 -.87%
Russell 2000 764.54 -.98%
Wilshire 5000 13,252.50 -.18%
S&P Equity Long/Short Index 1,189.89 +1.57%
S&P Barra Growth 609.13 -.54%
S&P Barra Value 699.33 +.43%
Morgan Stanley Consumer 609.49 +.86%
Morgan Stanley Cyclical 849.67 -.29%
Morgan Stanley Technology 544.16 -.80%
Transports 4,664.49 -.88%
Utilities 397.46 -.23%
S&P 500 Cum A/D Line 8,142 -2.0%
Bloomberg Crude Oil % Bulls 25.0 -54.34%
Put/Call .86 -5.49%
NYSE Arms 1.08 unch.
Volatility(VIX) 11.59 unch.
ISE Sentiment 167.00 +17.61%
AAII % Bulls 42.11 +24.84%
AAII % Bears 35.96 -11.93%
US Dollar 85.98 -2.31%
CRB 349.89 -2.43%
ECRI Weekly Leading Index 137.10 unch.
Futures Spot Prices
Crude Oil 71.58 -2.26%
Unleaded Gasoline 207.38 -3.77%
Natural Gas 6.59 -15.11%
Heating Oil 200.60 -1.71%
Gold 656.70 +5.29%
Base Metals 215.77 +.66%
Copper 324.90 +4.13%
10-year US Treasury Yield 5.05 +.78%
Average 30-year Mortgage Rate 6.58% +.77%
Leading Sectors
Banks +3.95%
Airlines +2.90%
Insurance +2.29%
Broadcasting +2.03%
Disk Drives +1.94%
Lagging Sectors
Defense -3.03%
I-Banks -3.77%
Energy -4.38%
Homebuilders -4.64%
Internet -5.21%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
Friday, April 28, 2006
Stocks Lower into the Final Hour on Losses in the Tech Sector
BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs, Networking longs and Computer longs. I covered some of my (IWM) and (QQQQ) shorts today and added to my (RACK) and (TLT) longs, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, sector performance is mostly positive and volume is very heavy. Natural gas finished floor trading near session lows, down 4%. It has now broken its cycle low and is down 58.5% from its highs. I expect its weakness to begin to weigh on the entire energy complex over the coming weeks. Energy-related stocks have given back much of this morning's gains. I expect US stocks to trade mixed-to-higher into the close from current levels on lower long-term rates and short-covering.
Today's Headlines
Bloomberg:
- Archer Daniels Midland(ADM) appointed former Chevron Corp.(CVX) executive Patricia Woertz as its new president and chief executive officer as it expands its fuel-making business.
- Vonage Holdings, a pioneer of Internet phone calling, plans to raise as much as $563.4 million in an IPO to help fund its expansion.
- Pinnacle Entertainment increased its bid for Aztar Corp.(AZR) to $1.85 billion, stepping up the competition to win the owner of the Tropicana casinos.
- The US dollar reached the weakest since May 2005 versus the euro and approached its lowest this year against the yen on anticipation interest rates will rise faster in Europe and Japan than the US.
- President Bush urged Congress to extend tax cuts to keep the economy growing and called on oil companies to help lower gasoline prices by reinvesting profits to expand productions.
- President Bush said diplomatic options to halt Iran’s suspected nuclear weapons program “are just beginning” and a report today by nuclear inspectors is helping to forge international unity on the issue.
- The UN nuclear agency today told the UN Security Council that Iran enriched uranium and is stonewalling inspectors’ efforts to determine whether the program is intended for the production of nuclear weapons.
Wall Street Journal:
- Mexico’s smaller families may strengthen the Latin American nation’s middle class and reduce the flow of migrants to the US.
- An Iraqi official predicted that a large number of US troops will leave the country this year and the remainder will be pulled out within two years.
- Time Warner’s(TWX) AOL Internet service will start a set of Web logs devoted to individual stocks such as General Electric(GE), Wal-Mart Stores(WMT) and Microsoft(MSFT).
AP:
- Iraq’s top Shiite Muslim cleric, Grand Ayatollah Ali al-Sistani, backed a plan by the incoming prime minister to disband militias.
NY Times:
- Suffolk County, on NY’s Long Island, is planning the largest government-sponsored wireless network, providing free Internet access to its 1.5 million residents.
Washington Post:
- A Spanish-language version of the US national anthem “The Star-Spangled Banner” hit the airwaves today, its release timed to coincide with the debate in Congress over immigration reform.
LA Times:
- As many as 1 million people may join two immigrant rights demonstrations Monday in LA.
China Iron and Steel Association:
- China’s first-quarter crude steel output rose 18% from a year ago to 92.2 million metric tons.
MSNBC:
- A special tax on the “windfall profits” of oil companies hasn’t worked in the past and would curtail exploration and production by energy companies, US Energy Secretary Bodman said.
- Archer Daniels Midland(ADM) appointed former Chevron Corp.(CVX) executive Patricia Woertz as its new president and chief executive officer as it expands its fuel-making business.
- Vonage Holdings, a pioneer of Internet phone calling, plans to raise as much as $563.4 million in an IPO to help fund its expansion.
- Pinnacle Entertainment increased its bid for Aztar Corp.(AZR) to $1.85 billion, stepping up the competition to win the owner of the Tropicana casinos.
- The US dollar reached the weakest since May 2005 versus the euro and approached its lowest this year against the yen on anticipation interest rates will rise faster in Europe and Japan than the US.
- President Bush urged Congress to extend tax cuts to keep the economy growing and called on oil companies to help lower gasoline prices by reinvesting profits to expand productions.
- President Bush said diplomatic options to halt Iran’s suspected nuclear weapons program “are just beginning” and a report today by nuclear inspectors is helping to forge international unity on the issue.
- The UN nuclear agency today told the UN Security Council that Iran enriched uranium and is stonewalling inspectors’ efforts to determine whether the program is intended for the production of nuclear weapons.
Wall Street Journal:
- Mexico’s smaller families may strengthen the Latin American nation’s middle class and reduce the flow of migrants to the US.
- An Iraqi official predicted that a large number of US troops will leave the country this year and the remainder will be pulled out within two years.
- Time Warner’s(TWX) AOL Internet service will start a set of Web logs devoted to individual stocks such as General Electric(GE), Wal-Mart Stores(WMT) and Microsoft(MSFT).
AP:
- Iraq’s top Shiite Muslim cleric, Grand Ayatollah Ali al-Sistani, backed a plan by the incoming prime minister to disband militias.
NY Times:
- Suffolk County, on NY’s Long Island, is planning the largest government-sponsored wireless network, providing free Internet access to its 1.5 million residents.
Washington Post:
- A Spanish-language version of the US national anthem “The Star-Spangled Banner” hit the airwaves today, its release timed to coincide with the debate in Congress over immigration reform.
LA Times:
- As many as 1 million people may join two immigrant rights demonstrations Monday in LA.
China Iron and Steel Association:
- China’s first-quarter crude steel output rose 18% from a year ago to 92.2 million metric tons.
MSNBC:
- A special tax on the “windfall profits” of oil companies hasn’t worked in the past and would curtail exploration and production by energy companies, US Energy Secretary Bodman said.
US Growth at Robust Levels, Inflation in Check, Confidence Still Irrationally Low, Manufacturing Slowing
- Advance 1Q GDP rose 4.8% versus estimates of a 4.9% increase and a 1.7% gain in 4Q.
- Advance 1Q GDP Price Index rose 3.3% versus estimates of a 2.7% gain and a 3.5% rise in 4Q.
- Advance 1Q Personal Consumption rose 5.5% versus estimates of a 5.0% increase and a .9% gain in 4Q.
- 1Q Employment Cost Index rose .6% versus estimates of a .9% gain and a .8% rise in 4Q.
- Final Univ. of Mich. Consumer Confidence for April fell to 87.4 versus estimates of 89.0 and a prior estimate of 89.2.
- Chicago Purchasing Manager for April fell to 57.2 versus estimates of 58.0 and a reading of 60.4 in March.
- Advance 1Q GDP Price Index rose 3.3% versus estimates of a 2.7% gain and a 3.5% rise in 4Q.
- Advance 1Q Personal Consumption rose 5.5% versus estimates of a 5.0% increase and a .9% gain in 4Q.
- 1Q Employment Cost Index rose .6% versus estimates of a .9% gain and a .8% rise in 4Q.
- Final Univ. of Mich. Consumer Confidence for April fell to 87.4 versus estimates of 89.0 and a prior estimate of 89.2.
- Chicago Purchasing Manager for April fell to 57.2 versus estimates of 58.0 and a reading of 60.4 in March.
BOTTOM LINE: The US economy expanded in the first quarter at an annual pace of 4.8%, the fastest in more than two years, led by resurgent consumer spending and the biggest jump in business investment since 2000, Bloomberg said. A healthy labor market and rising wages boosted shopping at retailers and auto dealers, while businesses purchased equipment and software at the fastest pace since before the bursting of the stock market bubble in 2000. Nominal GDP rose at an 8.2% annual pace to $13 trillion. The 5.5% gain in consumer spending was the highest since the third quarter of 2003 and significantly above the long-term average of 3.3%. Business spending on new equipment and software rose 16.4%, the most since the first quarter of 2000. The core PCE index, the Fed’s favorite inflation gauge decelerated to 2.0% from 2.4% during the fourth quarter. I expect GDP growth to moderate to average levels through year-end as a slowdown in consumer spending more than offsets increased business spending.
Confidence among US consumers declined this month as rising gas prices siphoned money from people’s wallets, Bloomberg reported. The decline was muted by a strong job market and the fastest economic growth in 2 years. The current conditions component of the index, which reflects American’s perceptions of their financial situations and whether they believe it is a good time to buy large items, rose to 109.2 from 109.1 in March. The expectations component of the index fell to 73.4 from 76 the prior month. I still expect this reading to join the Conference Board’s Consumer Confidence reading and reach cycle highs by year-end as stocks rise, housing moderates to more healthy levels, energy prices fall from current levels, the job market remains healthy, interest rates remain low and the situation in Iraq improves.
Manufacturing growth in the Chicago area slowed in April from the highest level this year as orders eased, Bloomberg reported. The new orders component of the index fell to 60.8 from 62.2 the prior month. The employment index fell to 47.2 this month from 55.6 in March. The prices paid index rose to 77.2 from 71.1 in March. Finally, the measure of order backlogs fell to 44.8 from 51.6 in March. I expect manufacturing to slow from recent robust rates as economic growth slows to average levels. I continue to believe the most cyclical stocks that have recently posted the strongest gains are at the greatest risk of underperforming going forward.
Friday Watch
Late-Night Headlines
Bloomberg:
- China Petroleum & Chemical Corp., Asia’s biggest oil refiner, said profit fell 3.6% in the first quarter as state curbs on fuel prices prevented it from passing on record crude costs.
- China’s decision to raise lending rates and further restrict bank lending will damp property sales and prices, deterring investment from abroad and putting developers under financial strain, analysts and executives said.
- The yen fell after Chief Cabinet Secretary Shinzo Abe and Heizo Takenaka, the minister of internal affairs, said mild deflation persists in Japan.
- Oil fell for a fifth straight day in NY as speculation increased production at US refineries will replenish gasoline supplies before the peak summer driving season.
Business Week:
- Tribune Co.(TRB), whose shares are down 28% in the past year, is a potential takeover target, citing Lawrence Haverty of Gabelli Global Multimedia Trust.
- Infocrossing Inc.(IFOX), which provides information technology outsourcing services, may rise because it may be a takeover target and its earnings are expected to increase, citing Sidoti’s David Gold.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.50% to +.25% on average.
S&P 500 indicated -.20%.
NASDAQ 100 indicated -.48%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (ADP)/.63
- (AXL)/.19
- (AVP)/.26
- (CVX)/1.78
- (CEG)/.66
- (COCO)/.16
- (CVH)/.73
- (CMI)/2.62
- (IDXX)/.55
- (ITT)/.61
- (MXRE)/.89
- (OSTK)/.-64
- (SWX)/1.03
- (VMSI)/.11
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance 1Q GDP is estimated to rise 4.9% versus a 1.7% gain in 4Q.
- Advance 1Q GDP Price Index is estimated to rise 2.7% versus a 3.5% increase in 4Q.
- Advance 1Q Personal Consumption is estimated to rise 5.0% versus a .9% increase in 4Q.
- 1Q Employment Cost Index is estimated to rise .9% versus a .8% increase in 4Q.
9:45 am EST
- Final Univ. of Mich. Consumer Confidence for April is estimated to fall to 89.0 versus a prior estimate of 89.2.
10:00 am EST
- Chicago Purchasing Manager for April is estimated to fall to 58.0 versus a reading of 60.4 in March.
Bloomberg:
- China Petroleum & Chemical Corp., Asia’s biggest oil refiner, said profit fell 3.6% in the first quarter as state curbs on fuel prices prevented it from passing on record crude costs.
- China’s decision to raise lending rates and further restrict bank lending will damp property sales and prices, deterring investment from abroad and putting developers under financial strain, analysts and executives said.
- The yen fell after Chief Cabinet Secretary Shinzo Abe and Heizo Takenaka, the minister of internal affairs, said mild deflation persists in Japan.
- Oil fell for a fifth straight day in NY as speculation increased production at US refineries will replenish gasoline supplies before the peak summer driving season.
Business Week:
- Tribune Co.(TRB), whose shares are down 28% in the past year, is a potential takeover target, citing Lawrence Haverty of Gabelli Global Multimedia Trust.
- Infocrossing Inc.(IFOX), which provides information technology outsourcing services, may rise because it may be a takeover target and its earnings are expected to increase, citing Sidoti’s David Gold.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.50% to +.25% on average.
S&P 500 indicated -.20%.
NASDAQ 100 indicated -.48%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (ADP)/.63
- (AXL)/.19
- (AVP)/.26
- (CVX)/1.78
- (CEG)/.66
- (COCO)/.16
- (CVH)/.73
- (CMI)/2.62
- (IDXX)/.55
- (ITT)/.61
- (MXRE)/.89
- (OSTK)/.-64
- (SWX)/1.03
- (VMSI)/.11
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance 1Q GDP is estimated to rise 4.9% versus a 1.7% gain in 4Q.
- Advance 1Q GDP Price Index is estimated to rise 2.7% versus a 3.5% increase in 4Q.
- Advance 1Q Personal Consumption is estimated to rise 5.0% versus a .9% increase in 4Q.
- 1Q Employment Cost Index is estimated to rise .9% versus a .8% increase in 4Q.
9:45 am EST
- Final Univ. of Mich. Consumer Confidence for April is estimated to fall to 89.0 versus a prior estimate of 89.2.
10:00 am EST
- Chicago Purchasing Manager for April is estimated to fall to 58.0 versus a reading of 60.4 in March.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology stocks in the region. I expect US equities to open lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the day.
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