Morning Movers: Dow Drops 162 Points as Good News Is Bad News Again


The Dow Jones Industrial Average is heading lower this morning after disappointing retail sales numbers --which weren't so disappointing, after all--pushed the 10-year Treasury yield well above 3%.


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S&P 500 futures have fallen 0.6%, while Dow Jones Industrial Average futures have dropped 162 points, or 0.7%. Nasdaq Composite futures have tumbled 0.9%.

On first glance, April's retail sales data was a disappointment. The headline number showed a 0.3% rise last month, in line with economist forecasts, and rose 0.3% once autos and gasoline are stripped out, below forecasts for a 0.4% increase.

But March's headline sales were revised upwards to 0.8% from 0.6%, while ex-autos and gas was adjusted up to 0.4%, from 0.3%. The upshot: "Retail sales for April came in a touch better than expected once prior revisions were considered though the month of April was a bit weaker than consensus," writes BMO Capital Markets' Aaron Kohli.

And with that, the 10-year Treasury sold off:


Since bond prices and yields move in opposite directions, the yield on the 10-year Treasury rose to 3.043% at 9:00 a.m. today, though it appears to have traded as high as 3.0669%, according to NatAlliance Securities' Andrew Brenner. "[A] new trend is starting," he writes. "Last time we were at these levels was in the summer of 2011."

One would think that all this good news about the economy would send stocks higher, but no. If the economy is too strong, then the Fed could be forced to hike interest rates more than the market has priced in, and that wouldn't be good news.

Fluor (FLR) has risen 0.9% to $47.25 after Bank of America Merrill Lynch added it to its US 1 list.

Ford (F) has declined 0.9% to $11.08 after Piper Jaffray downgraded it to Neutral.


Bloomberg News

Home Depot (HD) has dropped 3.1% to $185.25 after reporting first-quarter earnings. The home improvement retailer earned $2.08 a share on revenue of $24.95 billion; analysts were looking for earnings of $2.05 a share on revenue of $25.17 billion. It also reaffirmed its full year guidance, as it expects to earn $9.31 a share, compared with the $9.43 consensus estimate.

Micron Technology (MU) has advanced 1% to $53.52 after Stifel raised its price target to $101.

Pivotal Software (PVTL) has gained 1.4% to $19.15 after Goldman Sachs initiated coverage with a Buy rating.

Scotts Miracle Grow (SMG) has risen 1.7% to $83.10 after SunTrust Robinson Humphrey upgraded it to Buy.

Spotify (SPOT) has fallen 1.9% to $157 after Loop Capital initiated coverage with a Sell rating.

Valeant Pharmaceuticals International (VRX) has climbed 2.8% to $21.38 after Mizuho upgraded it to Buy.

Vodafone (VOD) has dropped 4.3% to $27.16 after reporting full-year earnings of 0.09 euro a share, matching analyst estimate, on revenue of 46.51 euro, compared with the 46.2 euro consensus. It also announced that its chief financial officer Nick Read will take over as chief executive from Vittorio Coalo in October.

Ulta Beauty (ULTA) has gained 1.4% to $250.55 after Oppenheimer upgraded it to Outperform.

Western Digital (WDC) has advanced 1.5% to $82.37 after announcing a $1 billion stock buyback. - Teresa Rivas

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

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

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