Economic News, Earnings Fuel Modest Losses in US Stocks

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The Dow Jones Industrial Average (DJI) inched into the black in early trading Wednesday, but spent the lion's share of the session wallowing south of breakeven, as traders digested a number of high-profile earnings reports and weighed the latest economic data points. "There were a slew of earnings reports," Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, noted. "The Boeing Company ( BA ) and The Procter & Gamble Company ( PG ) beat estimates, but Amgen, Inc. ( AMGN ) delivered a high-profile miss. In the end, it was a slightly red day, and the S&P 500 Index (SPX) snapped its winning streak. Still, when you consider the S&P was up six days in a row coming into today, a slightly lower day isn't anything to get too upset over."

Continue reading for more on today's market, including :

  • As rumors swirled of a deal between Starbucks Corporation ( SBUX ) and SodaStream International Ltd ( SODA ) , options players came out in droves to place their bets.
  • The latest developments in the hostile takeover attempt of Botox manufacturer Allergan, Inc. (AGN).
  • How one Bank of America Corp (BAC) bull bet nearly $2 million on long-term upside in the banking giant.
  • Plus ... New home sales plunge month-over-month, BA issues a positive outlook, and General Electric Company (GE) option bulls go bargain hunting.
Trading Topic of the Week -- 5 Reasons to Dodge Directional Risk: Take the pressure off your directional forecasting skills . If the stock looks poised for a big breakout -- but it's hard to tell which way the bull/bear scales are going to tip -- a straddle allows you to hedge your bets.

The Dow Jones Industrial Average (DJI - 16,501.65) traded in a relatively narrow 49-point range today before settling on a loss of 12.7 points, or 0.1%. Fresh from a positive earnings surprise, Boeing led the 11 Dow advancers with a gain of 2.4%, while AT&T Inc. (T) brought up the rear, shedding 3.8% after its own earnings report.

The S&P 500 Index (SPX - 1,875.39) brought its winning streak to a close, ending the day with a loss of 4.2 points, or 0.2%. After outperforming the last two days, the Nasdaq Composite (COMP - 4,126.97) faltered more than its index peers, slipping 34.5 points, or 0.8%.

The CBOE Volatility Index (VIX - 13.27) spent the entire day in the green, reaching as high as 13.75 before settling with a gain of 0.1 point, or 0.6%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The market shook off a weak report on new home data," noted Detrick. "The next two days are two of the heaviest days with companies reporting earnings, so get ready. All in all, earnings have come in better than the lowered expectations, and that is a big reason for the market's recent strength. Still, be on your toes, as a few high-profile misses could bring the bears back in a hurry."

5 Items on Our Radar Today :

  1. New home sales took quite a tumble in March, dropping 14.5% from February to a seasonally adjusted annual rate of 385,000. Economists were expecting a slight increase month-over-month, but the reading was negatively impacted due to higher mortgage rates and harsh winter weather. (USA Today)
  2. Markit's preliminary purchasing managers index (PMI) reading inched to 55.4 in April from 55.5 at the end of March. (Readings north of 50 are indicative of expansion.) The new orders and exports readings showed strength, while employment was moderately weaker. (MarketWatch)
  3. The Boeing Company ( BA ) said its adjusted first-quarter profits rose 14%, exceeding analysts' expectations . The aircraft name also lifted its outlook for the full year to between $7.15 per share and $7.35 per share. (Reuters)
  4. Wall Street expressed mixed emotions toward AT&T Inc. (T) following Ma Bell's turn in the earnings confessional.
  5. General Electric Company (GE) call buyers are taking advantage of historically low option prices.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Oil futures continued to falter in Wednesday's trading, after a report showed weekly crude supplies were the highest since records began more than 30 years ago. The June contract gave back 31 cents, or 0.3%, to close at $101.44 per barrel.

On the flip side, gold managed its first advance in four sessions, fueled by continued tension in Ukraine along with weakness in U.S. stocks. By the closing bell, gold for June delivery had edged up $3.50, or 0.3%, to $1,284.60 an ounce.

SCHAEFFER'S MARKET POSTURE



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: BA , PG , AMGN , SBUX , SODA

Schaeffer's Investment Research

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