Stock Market News Update for Tuesday, 11th May, 2010

Tuesday turned out as I predicted in "Market Outlook for Tuesday" and caution was definitely needed and markets produced little change for the day. Optimism in regard to aid the debt-riddled nations across the euro zone, (Refer to Rescue Plan for European Nations) seems to be present.

A couple of positive economic news items helped brighten the day.

• The excellent earnings forecast from Dow component Intel Corporation (INTC) were well received.

• The March wholesale inventories report, released by the Commerce Department, was presented today which showed an increase for the third straight month with the pace of inventory growth coming in just below the expectations of economists. The report showed that wholesale inventories increased by 0.4 percent in March following a 0.6 percent increase in February. Economists had expected inventories to increase by about 0.5 percent.

• Also, private-sector businesses accelerated their hiring by 4.8% to a seasonally adjusted 3.89 million in March – the highest level since January 2009.

The Dow Jones Industrial Average (DJIA – 10,748.26) had a negative earnings day, even though at one stage it was up 94 points, settling with a loss of 36.9 points, or 0.3%. The S&P 500 Index (SPX – 1,155.79) also had a loss on the day, of 3.9 points, or 0.3%, whilst the Nasdaq Composite (COMP – 2,375.31) fared the best of the three major indexes by settling, for the day, on a small gain of 0.6 point, or 0.03%.

Notes of Interest….

• The Dow Jones Industrial Average (DJIA) is still having trouble in conquering its 10-day and 10-week moving averages.

• The S&P 500 Index (SPX) also, could not re-capture its 10-day and 10-week trend lines.

• Also, the Nasdaq Composite (COMP) could not regain its own 10-week trend line.

• The Organization of Petroleum Exporting Countries (OPEC) revised monthly forecast, after the cartel lifted its outlook for Chinese oil demand growth by 50,000 barrels per day, and the caution taken by investors before the release tomorrow of the government's weekly inventories data, helped push crude oil for June delivery down by 43 cents, or 0.6%, to end at $76.37 per barrel.

• June-dated gold futures gained $19.50, or 1.6%, to settle at an all-time peak of $1,220.30 an ounce, due basically to the pessimism that is surfacing in regard to the rescue package.

VIX chart

The CBOE Market Volatility Index (VIX), the "fear gauge," did not impact as much today.

Company Earnings Reports

There has been some positive notes today particularly from the earnings arena. Several companies have presented earnings reports that exceeded the analysts’ expectations. These are:-

LDK Solar Co. (LDK)

• JA Solar (JASO)

• Fossil Inc. (FOSL) (PCLN)

• Origin Agritech Limited (SEED)

MBIA Inc. (MBI) presented a negative quarterly earnings report on the day, which surprised analysts.

Company News and Happenings:

• Maidenform Brands Inc. (MFB) said its first-quarter profit doubled and lifted its 2010 guidance.

• The Cheesecake Factory (CAKE) was upgraded by Baird, to “outperform”.

• Nuance Communications (NUAN) swung to a fiscal second-quarter loss due to higher acquisition and re-structuring costs.


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