Although the Dow is holding onto a modest gain, the rest of the US equity markets are finding some pressure amid mixed data, while technology issues are the worst performers on the day.
-Market Analysis Group, Charles Schwab
April 16, 2012
Although the Dow is holding onto a modest gain, the rest of the US equity markets are finding some pressure amid mixed data, while technology issues are the worst performers on the day. Stocks gave up early gains that followed a stronger-than-anticipated US retail sales report and optimism about a soft landing in China after it loosened the reins on its currency fluctuations.
Some of the pressure is being fostered by separate reports from the US economic calendar that showed manufacturing activity in the New York region and national homebuilder sentiment both came in below expectations. Treasuries are higher amid the weakness in the broad equity markets and following the mixed data, which also included an inline increase in US business inventories. Meanwhile the domestic earnings front is also diverse, with Citigroup Inc topping the Street's 1Q earnings expectations, while Mattel Inc missed analysts' 1Q estimates. Crude oil, gold and the US dollar are all moving lower. In other US equity news, Dow member Procter & Gamble Co raised its quarterly dividend by 7%. Overseas, Spanish stocks moved lower as the country's bond yields continue to rise amid growing sovereign debt uneasiness, but the rest of the European equity markets moved higher.
At 12:45 p.m. ET, the Dow Jones Industrial Average is gaining 0.5%, while the S&P 500 Index is decreasing 0.1% and the Nasdaq Composite is trading 0.9% to the downside. WTI crude oil is decreasing $0.48 to $102.35 per barrel, Brent crude oil is falling $2.77 at $118.44 per barrel, and wholesale gasoline is off $0.06 at $3.28 per gallon. The Bloomberg gold spot price is declining $9.75 to $1,648.63 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.1% at 79.85.
Citigroup Inc. (C $34) reported 1Q earnings ex-items of $1.11 per share, above the $1.00 consensus estimate of analysts surveyed by Reuters, with revenues declining 2% year-over-year (y/y) to $19.4 billion, compared to the $19.8 billion that the Street had expected. The company's revenues figure included a negative $1.3 billion valuation adjustment to its debt securities holdings due to the tightening of its credit spreads. Citi noted that global consumer banking—its largest business—produced "another quarter of good growth in revenues, net income and key drivers like loans and deposits." Elsewhere, the company said its transaction services had record quarterly revenues and its securities banking unit "rebounded strongly." Citi said it had a $1.2 billion net release of its credit reserves—its firewall to absorb losses on its loans—saying that it continues to be "one of the best capitalized banks in the world." However, the company cautioned that while the operating environment improved in 1Q, "there is still much macro uncertainty and we will continue to manage risk carefully." Shares are higher.
Mattel Inc. (MAT $31) posted 1Q profits ex-items of $0.06 per share, one penny below the Street's estimate, with revenues declining 2% y/y to $928 million, south of the $987 million that analysts had projected. The toy maker said its North American sales fell 9%, offsetting a 7% increase in international revenues, with sales of Barbie, along with its Hot Wheels, Matchbox, and Tyco brands all falling. MAT is trading sharply lower.
Dow member Procter & Gamble Co. (PG $67) is moving to the upside after the consumer product maker announced that it has raised its quarterly dividend 7% to $0.562 per share. PG has increased the dividend for 56 consecutive years.