Overnight, equity futures remained up about 8 points, but sold
off quickly once the market officially opened for trading as
Treasuries rallied to the high of the day. The
(INDEXSP:.INX) reached an intraday low of 1,548 in the opening
hour before rallying back to close at the high of the day around
1,563. Notable early laggards were the homebuilders, materials,
and industrial sectors.
Much of this weakness was attributed to weakness in
) first-quarter earnings, which included significantly lowered
full-year revenue and EPS guidance. However, much of the weakness
in Caterpillar's earnings and guidance was attributed to a
decline in mining equipment demand, something we've already seen
show up in lower commodity prices. Demand for industrial
equipment remained flat quarter-to-quarter. Caterpillar also
announced a $1 billion share buyback, which obviously helped its
positive performance after the report.
Existing home sales fell 0.6% month-over-month in March to an
annualized rate of 4.92 million homes, mostly due to a decline in
the more volatile multi-family home market, while single family
homes declined marginally. Existing home supply rose to 4.7
months from 4.6 months in February. Median home prices rose to
$184,300 from $173,200 the month prior.
Hedge fund ValueAct took a $1.8 billion stake in
), making it the top holder of the tech stock. At an investing
conference today, ValueAct's team noted that the stock had plenty
of room to grow to the upside, including in its recurring
business lines. Microsoft closed up 3.6% on the highest volume in
the last 52 weeks.
Tomorrow's Financial Outlook
There is more housing data on tap for tomorrow. In the
morning, the April Richmond Fed regional manufacturing survey and
March new home sales will be released. Month-to-month, new home
sales are expected to grow 1.2% to an annualized rate of 416,000
homes. The prior month saw a monthly decline of 4.6% to 411,000.
The Richmond Fed manufacturing survey's diffusion index is
expected to decline to 2 from 3 in March. Last month's survey
declined from 6 to 3 due to a drop in capacity and new order
Globally, China will release its manufacturing PMI via HSBC's
flash index. China data is expected to remain moderate with the
index showing a reading of 51.5 from the prior month's 51.6. In
Europe, the first estimate of the eurozone's composite
manufacturing index is expected to remain unchanged at 46.5 in
April from the month prior.
US earnings will be quite robust this week. While there are over
20 reports scheduled for tomorrow, notable ones include