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| Currency | US Dollar |
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| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
Weakness in technology stocks and crude oil's first close above $127 a barrel cut the knees out from a stock market rally.
The Dow Jones industrials had been up as many as 150 points but ended with a gain of just 41 points to 13,028. The Standard & Poor's 500 Index, which had cheered market bulls when it crossed its 200-day moving average, ended with a gain of just 1 point to 1,427.
The Nasdaq Composite Index fell about 13 points to 2,516, in part because flash-memory maker SanDisk (SNDK, news, msgs) CEO Eli Harari offered a cautious outlook that high oil prices will hit consumer spending. That gutted a rally in semiconductor stocks that began when Goldman Sachs upgraded the entire group. SanDisk fell nearly 8% to $29.85.
It was the worst performer among S&P 500 stocks and the 19 stocks in the Philadelphia Semiconductor Index ($SOX.X). The index itself off 0.8% to 418.
Plus, SanDisk was the second-worst performer among Nasdaq-100 ($NDX.X) stocks.
At the same time, share of Apple (AAPL, news, msgs) fell 2.1% to $183.60 on concern about weakening sales of its iPod music player.
Even the Dow Jones Transportation Average ($DJT) was battered by the late-day selling. Up as many as 168 points to a record 5,537 in the early afternoon, the index finished up just 26 points to 5,395. Trucking company YRC Worldwide (YRCW, news, msgs) was the leader, up 3.3% to $19.17.
Railroads generally were higher after a Stifel Nicolaus analyst upgraded Union Pacific (UNP, news, msgs) to "buy" and raised 12-month target prices for two other rail companies. Package shippers also rose with the broader market, even as oil climbed closer to its trading record. Union Pacific was up 0.3% to $153.50.
Railroad and trucking stocks have been among the best stock market performers all year as exports of farm products and chemicals have been booming. The group's strength have given many analysts and economists confidence that the recession, assuming it exists, will be mild at worst. Rising transportation stocks seen as a leading indicator for the economy overall.
With today's close, the Dow transports are up 18% this year, compared with a loss of 1.8% for the Dow and 2.8% for the S&P 500. The index would be up even more if three of the four airlines in the index -- JetBlue Airways (JBLU, news, msgs), Continental Airlines (CAL, news, msgs) and American Airlines parent AMR Corp. (AMR, news, msgs) -- weren't down 17% to 38% for the year.
Continental was down 6% to $16.89 today; AMR was off 4.8% to $8.73. JetBlue was off 0.2% to $4.87.
The fourth airline in the Dow Transports -- Southwest Airlines (LUV, news, msgs) -- was down 1.3% to $13.22 today but is up 8.4% on the year.
The market has been hit by a number of late-day fades in recent weeks, in part because the market seems to react badly to every new closing high for crude oil. Crude oil is up 11% this month, 25% on the quarter and 32% on the year. The late-day buying appears to have been set off by a comment from Chakib Khelil, president of the Organization of Petroleum Exporting Countries, who said the organization wouldn't meet to discuss boosting production before its planned meeting Sept. 9.
The Amex Oil Index ($XOI.X) moved up 1% to 1,615. Dow components Chevron (CVX, news, msgs) and ExxonMobil (XOM, news, msgs) were both up 1.8% to $102.20 and $94.36, respectively. The two were stocks were the third- and fourth-best performers among the 30 Dow stocks.
Aluminum giant Alcoa (AA, news, msgs) was the Dow leader with a 3.3% gain to $44.59, followed by Boeing (BA, news, msgs), up 2.2% to $87.07.
Amazon.com (AMZN, news, msgs) led both the S&P 500 and the Nasdaq-100 with a 7.6% gain to $82.29 on an upgrade from Goldman Sachs.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $127.05 | $126.29 | $0.76 | 11.98% | 32.37% |
| Heating oil (per gallon) | $3.6751 | $3.7028 | -$0.0277 | 15.68% | 38.71% |
| Natural gas (per million BTU) | $10.9540 | $11.0940 | -$0.1400 | 1.02% | 46.39% |
| Unleaded gasoline (per gallon) | $3.2366 | $3.2235 | $0.0131 | 10.42% | 29.94% |
A big day for earnings ahead
You may think the first-quarter earnings season is over. But you'd be wrong.Tuesday is full of big companies reporting profits, including Dow components Home Depot (HD, news, msgs) and Hewlett-Packard (HPQ, news, msgs) in the morning and afternoon, respectively.
Stock Charts (Year)
Red Robin Gourmet Burgers
All will fill out the picture of the health of the consumer, especially Target and Red Robin.
Red Robin's restaurants mostly inhabit the suburbs, and the stock peaked in July 2005 about the same time that housing stocks peaked. It's down about 35% since and fell 16% in the first six trading sessions of 2008 alone. But, while the stock was off 3.5% to $39.99 today, the close was up more than 48% from its Jan. 9 low.
The company is expected to report 50 cents a share in earnings on revenue of $256 million, up 13% and 20% from a year ago.
Separately, the Labor Department will release the Producer Price Index for April at 8:30 a.m. Tuesday, and economists expect it to show an increase of 0.5% for last month.
Core producer prices are expected to have risen by 0.2% in April.
Unlike the Consumer Price Index, which is seasonally adjusted to account for normal price fluctuations, the PPI will likely show the impact of recent jumps in food and energy prices. The report comes out on Wednesday before the opening bell.
Leading indicators suggest a better second half
For much of the day, stocks took strength from a better-than-expected report on leading economic indicators.The Conference Board's index of leading economic indicators rose an unexpected 0.1% in April. Economists had expected a flat reading.
"These data certainly reflect a weak economy, but not one in recession," said Ken Goldstein, labor economist at the Conference Board.
April's gain follows a 0.1% increase in March, which "could be a signal that the economy may not weaken further."
Six of 10 leading economic indicators rose in April, including stock prices, the interest-rate spread between the Federal Reserve's federal funds rate and the 10-year Treasury note, and consumer-goods orders.
Microsoft back in talks with Yahoo
Like a high school relationship, talks between Microsoft (MSFT, news, msgs) and Yahoo (YHOO, news, msgs) -- called off earlier this month -- are on again. (Microsoft is the publisher of MSN Money.)On Sunday, Microsoft said that it is "considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo."
Yahoo responded by saying that it is "open to pursuing any transaction which is in the best interest of our stockholders."
The timing of this announcement is what is most interesting, New York Times reporter Andrew Ross Sorkin told CNBC. Sorkin said Microsoft is trying to get in the way of a deal between Yahoo and mutual rival Google (GOOG, news, msgs).
Microsoft on May 3 withdrew a $33-per-share offer for Yahoo; the software giant had offered $31 per share for Yahoo on Feb. 1, but Yahoo rejected that bid as too low. After Microsoft's withdrawal earlier this month, billionaire investor Carl Icahn said that he had purchased roughly 59 million shares of Yahoo stock and lined up a 10-person slate of nominees to replace Yahoo's current board of directors at the company's annual meeting on July 3.
Microsoft may buy only Yahoo's search business, according to technology site All Things Digital, while The Wall Street Journal said that the deal would likely involve Yahoo carrying search advertisements from Microsoft.
"What Microsoft is most interested in is getting that Yahoo subscriber base," Brendan Barnicle, an analyst at Pacific Crest Securities, told Bloomberg News. A complete merger may have provided challenges for Microsoft, Barnicle said.
In the statement, Microsoft said that it "reserves the right to reconsider" making a new bid for Yahoo.
Shares of Yahoo closed up 2 cents to $27.68 on the day. Microsoft dropped 1.8% to $29.46 and was the worst-performing stock among the 30 Dow stocks.
A pricey fill-up awaits holiday travelers
With the Memorial Day weekend ahead, drivers face a lot of pain at the gas station.The average price of self-serve regular gasoline jumped 17 cents to $3.79 a gallon over the last two weeks, according to the Lundberg Survey, which polls about 7,000 gas stations across the country. "We are within 21 cents of $4 a gallon," survey editor Trilby Lundberg told reporters. "There seems to be very good chance that we will reach it."
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Two metro areas have already seen $4 gas: Chicago, where the average was $4.07 a gallon, and New York's Long Island, where gas prices averaged $4.01 a gallon. Record gas prices have caused concern for consumers and have had an impact on retailers; more consumers are using their spending money to buy necessities like gas and food instead of buying discretionary items that could help lift sales at retail stores.
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Come on, is inflation really that low?If they're going to lie to us about inflation, shouldn't they make the lies believable? Jim Jubak says there's no way gas prices fell during April, as the government claims.
"There's a perception that demand is going to hold up pretty strongly this year," Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne, told CNNMoney.com. "This idea that the market just couldn't handle ($100 per barrel) oil has just gone out the window . . . so there's a parallel shift at where the market will trade."
Lowe's gives weak forecast
The slumping housing market is weighing on home-improvement retailer Lowe's (LOW, news, msgs).This morning, Lowe's said its first-quarter profit fell 18% to $607 million, or 41 cents per share, from $739 million, or 48 cents per share, in the same quarter last year. The results topped Wall Street's estimates by a penny.
Stock Charts (Year)
Lowe's
Home Depot
"The generally poor economic outlook, including well-known housing pressures, rising food and fuel prices and a more negative employment picture eroded consumer confidence and impacted discretionary purchases for the home," Chief Executive Officer Robert Niblock said in a statement.
Shares of Lowe's lost 2.6% to $24.25 today. Rival Home Depot, which reports first-quarter earnings on Tuesday, was off 0.8% to $28.87.
Analyst calls boost Amazon, National City
Amazon.com shares jumped after Goldman Sachs upgraded the stock to "buy" from "neutral."True, Goldman said, "a long recession could hurt Amazon's stock." But that could help Amazon as well "by removing offline retail capacity and pushing consumers to shop online."
National City (NCC, news, msgs) shares got a boost from Citigroup this morning. Citigroup upgraded the bank to "buy" from "hold," sending shares up 5.4% to $5.88.
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Goldman shares fell 1.5% to $184.40; Morgan Stanley shares fell 2.1% to $46.20, and Lehman shares fell 2% to $42.79.
What's on tap this week
Lowe's concerns about the housing market could well be confirmed Friday, when a report on existing-home sales is expected to show a decline in April. Economists predict the report from the National Association of Realtors will show a 1.6% drop to an annual rate of 4.85 million. Existing-home sales make up about 85% of the market. A critical question is the inventory, usually measured in months' supply. It was 9.9 months in March and has hovered around that number for seven months. In 2005, there was just a 4.5-month supply.Rising numbers of foreclosures are adding to the surplus of unsold homes on the market -- which, in turn, is weighing on home prices. "A recessionary environment will arise during this year, triggered by housing weakness," Michelle Meyer, a Lehman Bros. economist, told Bloomberg News.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.805% | 1.800% | 0.005 | 34.70% | -42.52% |
| 5-year Treasury note yield | 3.090% | 3.116% | -0.026 | 1.88% | -10.56% |
| 10-year Treasury note yield | 3.839% | 3.850% | -0.011 | 2.13% | -4.86% |
| 30-year Treasury bond yield | 4.575% | 4.579% | -0.004 | 1.73% | 2.60% |
| Currencies | |||||
| U.S. Dollar Index | 73.175 | 72.960 | 0.215 | 0.63% | -4.59% |
| British pound in dollars | $1.9482 | $1.9585 | -0.0103 | -2.01% | -2.07% |
| Dollar in British pounds | £0.5133 | £0.5106 | 0.0027 | 2.05% | 2.11% |
| Euro in dollars | $1.5513 | $1.5603 | -0.0090 | -0.68% | 6.14% |
| Dollar in euros | € 0.6446 | € 0.6409 | 0.0037 | 0.69% | -5.79% |
| Dollar in yen | ¥104.61 | ¥103.95 | 0.66 | 0.65% | -6.47% |
| Canadian dollar in U.S. dollars | $1.009 | $1.001 | $0.0081 | 1.52% | 1.62% |
| U.S. dollar in Canadian dollars | $0.992 | $0.999 | -$0.0073 | -1.43% | -1.60% |
| Commodities | |||||
| Gold | $905.80 | $882.10 | $5.90 | 4.70% | 8.09% |
| Copper | $3.7755 | $3.8265 | -$0.05 | -3.30% | 24.15% |
| Silver | $17.0280 | $16.9600 | $0.07 | 2.62% | 14.13% |
| Corn | $5.8675 | $5.9100 | -$0.04 | -2.25% | 28.81% |
| Crude oil (NYMEX) (per barrel) | $127.05 | $126.29 | $0.76 | 11.98% | 32.37% |
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