Cautious Tone Pervades U.S. Equity Markets; Fed Fears in Focus

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U.S. equity markets got off the ground on solid footing at the open, after futures pointed to a modestly higher start across the board. The positive tone was ignited pre-bell by the Commerce Department's trade data report, which showed that the U.S. trade deficit rose 8.5% to $40.3 billion in April, which was less than the expectations of an increase to $41.5 billion from $38.8 billion in March, according to economists polled by MarketWatch.

About an hour into the session, however, stocks quickly reversed course to the downside - a reversal which coincided with a Treasury bid, pressuring the 10-year yield off its highest level of the day, to 2.145%, according to Briefing.com. The Dow dipped into the red after rising about 40 points at its day top, while the Nasdaq held on to slight gains, after underperforming on Monday. At mid-day, all three indexes are close to flat, with the Nasdaq showing modest relative strength.

In early dealings, the domestic housing market continued to lend ballast to the move north, as the cyclical uptrend in home prices continued. CoreLogic reported that April home prices rose 3.2% compared to March levels--the fastest year-over-year growth pace in more than seven years. That support gave way, however, to ongoing concern of an imminent shift in Fed bond-buying policy, with the potential for higher interest rates diminishing investors' appetites for U.S. equities.

In individual stock news of note, shares of General Motors ( GM ) were up another 2% today after yesterday's announcement that the company will be added to the S&P 100 and 500, replacing H.J. Heinz ( HNZ ) which is being purchased by Berkshire Hathaway. As a result, GM shares jumped to a new 52-week high of $35.49 in today's trading before pulling back slightly.

Overseas, Asian markets finished higher, with Japanese stocks ending on a stronger note ahead of a speech by Prime Minister Abe on Wednesday. European stocks firmed up following upbeat U.S. data, but like their American counterparts, they're struggling to stay in the black as the trading day progresses.

Later today investors will be monitoring speeches from two voting members of the Federal Open Market Committee: Gov. Sarah Bloom Raskin at 12:30 p.m. ET and Kansas City Fed President Esther George at 1:30 p.m. ET.

Commodities were mixed at mid-day, with crude oil slipping $0.63 to trade at $92.82 per barrel. Natural gas was up $0.014 to $4.005 per million BTUs.

Gold futures were down $17.30 per ounce to $1,394.80, while silver was down $0.386 to $22.335 per ounce. Copper was up $0.03 to $3.3605.

Here's where the markets stood at mid-day:

NYSE Composite up 0.89 (+0.01%) to 9,357.90

Dow Jones Industrial Average down 9.25 (-0.06%) to 15,244.78

S&P 500 down 0.64 (-0.04%) to 1,639.78

Nasdaq Composite Index up 4.4 (+0.13%) to 3,469.77

GLOBAL SENTIMENT:

Nikkei 225 Index up 1.20%

Hang Seng Index up 1.05%

Shanghai China Composite Index up 1.22%

FTSE 100 Index up 0.37%

DAX up 0.05%

CAC 40 up 0.11%

NYSE SECTOR INDICES:

NYSE Energy Sector Index (^NYE) down 66.64 (-0.5%) at 13,312.31

NYSE Financial Sector Index (^NYK) up 18.68 (+0.32%) to 5,821.86

NYSE Healthcare Sector Index (^NYP) up 16.36 (+0.32%) to 9,259.37

UPSIDE MOVERS:

(+) CTCT (3.7%) Announced that its SinglePlatform division is partnering with GrubHub, an online and mobile food ordering service, to become a menu provider for GrubHub's AllMenus.com and integrate GrubHub's online ordering platform into SinglePlatform menus.

(+) CASM (+2.4%) Received 510(k) clearance from the U.S. Food and Drug Administration for its next-generation 740 SELECTTM vital signs monitor and its MAX IQ non-invasive blood pressure technology. CASM plans to begin fulfilling orders for these products during Q3 2013.

(+) GIII (+18.1%, hit new 52-week high) Shares climbed to new 52-week top of $51.50 after company reported late Monday that Q1 sales were $272.6 million, vs. the analyst consensus of $266.9 mln on Capital IQ. EPS was $0.05, vs. expectations of a loss of $0.05 per share. The company said there was a strong performance in the quarter especially with regard to a number of its Calvin Klein products, and from its growing retail operations.

DOWNSIDE MOVERS:

(-) PSTI (-14.7%) The FDA suspended the Phase II trial of the company's placenta-based cell treatment for artery disease after a patient on the treatment was hospitalized with severe allergic reaction. Pluristem says that the patient's other conditions may have caused the reaction. The patient was released from the hospital the following day.

(-) NCQ (-3.3%) Company announced that, in connection with the approval of the shareholders of NovaGold Resources ( NG ),and the execution by NovaGold of an agreement dated May 30, 2013 amending an original escrow agreement dated May 22, 1987, NovaGold common shares registered to certain founders of NovaGold may be released from escrow upon compliance by NovaGold, provides that NovaGold must issue a news release at least 60 days before the first release of escrow securities under the amending agreement.

(-) SAIC (-1%) Company reported Q1 revenues of $2.7 billion, down from $2.76 billion the year prior, and EPS of $0.23 for Q1 2014. That EPS is short of the $0.27 analysts were expecting, though revenue beat estimates of $2.6 billion. The company's chairman and CEO, John Jumper, attributed the year-over-year decline in revenues and earnings to the government's spending cuts earlier this year. SAIC expects revenues of $10.0 billion to $10.7 billion for fiscal 2014, which is a range mainly above the $10.3 billion analysts were expecting.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: GM , HNZ , NG

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