Stock Market News for May 18, 2011 - Market News
18 Maio 2011 - 6:06AM
Zacks
Lukewarm economic data discouraged investors as it showed further
signs of economic weakness and coupled with the negative outlook
from Hewlett-Packard Company, the markets continued its stay in the
red. However, on the back of favorable corporate results, the
indices showed some resistance to limit its losses but could not
prevent the markets from declining for the third-straight
day.
The Dow Jones Industrial
Average, during the day, had dropped 170 points but finally
rebounded to close at 12,479.58, shedding 68 points or 0.5%. The
Dow finished at its lowest level since April 20. The Standard &
Poor 500 (S&P 500) dropped 0.04% to finish off at 1,328.98.
However, the Nasdaq Composite Index was up 0.03%. The fear-gauge
CBOE Volatility Index (VIX) was up over 18. On the New York Stock
Exchange, decline-advance ratio was 17:12. So far in the week, the
benchmarks have been trading down as the Dow, S&P 500 and the
Nasdaq are down 0.9%, 0.7% and 1.6%, respectively.
As we said earlier,
approaching the end of the earnings season the markets will depend
heavily on the economic data with the lack of any other major news.
Unfortunately, economic data is displaying a downtrend for the
economy and subsequently the indices are edging lower. On Tuesday
even, the economic data came in to heighten investors’ concern
about the economy as factory production and housing data both
fell.
According to a Federal
Reserve report, factory output in US fell for the first time in 10
months as it declined 0.4% in last month. The report came in
against the analysts’ expectations of an increase of 0.4% in the
overall factory production. The Federal Reserve reasoned the
natural disaster in Japan to have caused the decline as it
disrupted the supply of the auto parts. However, factory output was
up 0.2%, without considering the auto vehicles and parts.
Meanwhile, the total industrial production was up 5% from its
year-ago level.
Separately, the housing
markets continued to return gloomy picture as the Commerce
Department reported housing starts to have fallen 10.6% or to
seasonally adjusted 523, 000 units annual rate. Permits for new
houses were down 4.0% to 551,000 in April and single-family home
building was also down 5.1%. Housing sector is causing much jitters
as this report added to the concern already built by reports from
the National Association of Home Builders (NAHB) that came in a day
earlier of this disappointing report. On Monday, NAHB said that the
index measuring the confidence of home builders remained unchanged
this month. The index lingered at the low level of 16 and suggested
no improvement in the housing sector.
Investors’ sentiments were
further weighed down after the CEO of Hewlett-Packard Company
(NYSE:HPQ) warned of “another tough quarter" coming up. The company
gave a negative outlook and reduced the guidance. Leo Apotheker,
CEO of HPQ, commenting on the company missing some market
opportunities said: "We are going to address this. We are going to
focus our services business on the higher part of the value chain.
That requires some work, some investment, and hence the impact it
will have for a couple of quarters”. He further said: "We're not
going to wait any longer. We are going to make a few changes.
Therefore, we have to adjust our margin expectations for services".
The company slashed the full-year earnings guidance from
$5.20-$5.28 to $5.00 per share and chopped the full year revenue
estimate from $130 billion- $131.5 billion to $129 billion-$130
billion. This took a dip at the shares of the company and went down
7.3% to settle at $36.91.
The crude-prices in recent
days have been trending down and on Tuesday the crude prices for
June delivery were down 0.5% to $96.91 per barrel. In the energy
sector, shares of Chevron Corp. (NYSE:CVX), Transocean Ltd.
(NYSE:RIG), Halliburton Company (NYSE:HAL) and Schlumberger Limited
(NYSE:SLB) were down 0.5%, 1.0%, 0.2% and 0.2%, respectively.
However, shares like ConocoPhillips (NYSE:COP) and Exxon Mobil
Corporation (NYSE:XOM) were both up 0.2%.
Talking about the sectors,
materials and industrials suffered heavy fall. Shares like
Caterpillar Inc. (NYSE:CAT), Alcoa, Inc. (NYSE:AA),
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) and Southern
Copper Corp. (NYSE:SCCO) were down 3.8%, 2.8%, 1.1% and 1.3%,
respectively.
ALCOA INC (AA): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
FREEPT MC COP-B (FCX): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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