US stocks ended with moderate losses on Thursday, 23 May 2013 at Wall Street. Stocks managed to erase most of their losses and ended with modest ones following better than expected economic data at Wall Street. Positive earnings surprise from H-P helped the Dow pare most of its losses. The dollar witnessed a steep fall helping commodities rise partly.
Stocks had dropped sharply at the start of trading, taking their cue from a massive sell off in Japanese equities overnight. However, they began to lift off their session lows after the release of housing data mid-morning. The session was choppy, with stocks briefly rising into positive territory only to surrender those gains.
For the day, the Dow ended lower by 12.67 points (0.08%) at 15,294.5. Nasdaq ended lower by 3.88 points (0.11%) at 3,459.42. S&P 500 ended lower by 4.84 points (0.3%) at 1,650.51. Dow was trading lower by 112 points earlier during the day.
Nine out of ten economic sectors ended lower led by utilities sector. Telecom was the sole gainer. Twenty one out of thirty Dow components ended in the red. H-P was the big gainer in the Dow rising 17%.
The major averages hover near their lows as investors react to the 7.3% plunge in the Nikkei as well as disappointing economic data from China. Wall Street had a wild ride on Wednesday on Fed tapering fears.
Regarding economic data expected at Wall Street on Thursday, the initial claims level dropped back below 350,000. The initial claims level fell to 340,000 for the week ending May 18 from an upwardly revised 363,000 (from 360,000) for the week ending May 11. The consensus expected the initial claims level to fall to 348,000.
Separately, new home sales increased 2.3% to 454,000 in April after a sizable upward revision for March to 444,000 (from 417,000). The consensus pegged new home sales at 425,000. Inventory levels remain depressed. There is only a 4.1-month supply at current sales rates. During a normal environment, homebuilders try to maintain a 6-month supply. That means construction growth should accelerate from current levels.
China manufacturing data issued Thursday came in weaker than expected. The preliminary China HSBC manufacturing PMI dropped to a seven-month low of 49.6 in May. A number below 50.0 indicates contraction. The fact that gold rallied in the face of this commodity-market-bearish China news also suggests there was solid safe-haven demand for gold on Thursday.
In the European Union, there was more weak economic data released on Thursday. The Markit purchasing managers' survey for the Euro zone came in at 47.7 in May from 46.9 in April, below the 50.0 threshold, which suggests contraction. There was another dour assessment of the European Union economy from an EU official on Thursday. Ewald Nowatny, a member of the European Central Bank's governing council, said there is no improvement in sight for the EU economy. The EU economy has been in contraction for the past year and a half.
In the tech sector, major components like Apple, Oracle and Cisco Systems held up relatively well.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.5%.
On the earnings front, shares of Hewlett-Packard jumped 17% after the computer maker reported second-quarter results and an outlook above expectations. In addition, the computer company guided third quarter earnings above analyst expectations and raised its dividend 10.0% to $0.1452.
Crude-oil prices ended mildly lower on Thursday, 23 May 2013 at Nymex. Prices recouped back most or prior session's loss as the dollar turned weak and US economic data checked in better than expected. Light and sweet crude for July ended lower by $0.03 (0.03%) at $94.25 a barrel on the New York Mercantile Exchange on Thursday. Prices had shed close to 2% a day earlier.
Bullion metal prices ended higher on Thursday, 23 May 2013. A steep decline in the US dollar and overall weakness in the global equities took prices of precious metals higher. Gold for June delivery ended higher by $24.4 (1.8%) at $1,391.8 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. August gold which is now the most-active contract, also tacked on $24.40, or 1.8%, to end at $1,392.80 an ounce. July silver ended higher by $0.04 cents (0.2%) at $22.51 an ounce on Thursday.
Indian ADRs ended mixed on Thursday. In the IT space, Infosys was down 1.4% and Wipro was down 0.4%. In the Banking space, HDFC Bank was up 0.5% and ICICI Bank was down 1.5%. In the Telecom space, Tata Communication was down 4.9%. In other space, Tata Motors gained 0.3%, Dr Reddys was down 0.5% and Sterlite was down 1.6%.
Tomorrow, April durable orders and durable orders ex- transportation will be reported at 8:30 ET.
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