Stock Market News Update
Tuesday, 18th May, 2010

Tuesday was another successful day for the bears, dragging the Dow Jones Industrial Average (DJIA) back from a 90 point lead earlier in the day to settle at 114.88 points in the red. Wal-Mart (WMT) was the only Dow component to finish in the black.

The bulls were on a run after a good earnings report from Wal-Mart Stores (WMT) as well as economic data in regard to new home construction which jumped to a steeper-than-anticipated 5.8% in April, the best annual rate since 2008. However, the European debt drama came into play, with the euro dropping to a new four-year low of $1,219, and combined with some analysts saying that Germany planned to ban “naked” short selling, as well as rate hikes being imminent, sent the bears roaming free to create havoc on the bulls progress.

The Dow Jones Industrial Average (DJIA – 10,510.95) had another disastrous earnings day, with a loss of only 114.88 points, or 1.08%. The S&P 500 Index (SPX – 1,120.80) also had a major loss, for the day, of 16.14 points, or 1.42%, whilst the Nasdaq Composite (COMP – 2,317.26) didn’t fare any better, settling, for the day, on a loss of 36.97 points, or 1.38%.

Time for the S&P 500 Index (SPX) to Reverse Course

Looking at several technical indicators it would appear that the S&P 500 Index (SPX) is on course to turn higher once again.

1. The SPX is holding firmly above its 160-day moving average, a trendline that provided key support for the index in February.

2. The moving average is currently resting in the 1,120 region, which is significant for a couple of reasons.

• The 1,120 area provided brief resistance in November and early December 2009.

• This region is home to a 50% retracement of the SPX's "flash crash" low at 1,065 and the ensuing rebound high of 1,173.

SPX - 160 days - May 18, 2010

Notes of Interest….

• Crude oil for June delivery fell 67 cents, or 1%, to settle at a seven-month low of $69.41 per barrel. The greenback's four-year peak versus the euro fueled crude's about-face from a morning positive aspect.

• June-dated gold futures fell $13.50, or 1.1%, to finish at $1,214.60 an ounce, which is an about face compared to other situations of investor concern where it has usually acted as a safe-haven for nervous traders.

VIX -May 18

CBOE Volatility Index (VIX) is certainly making a come-back in this tumultuous time with a gain, for the day of 8.79%, or $2.71, to close at $33.55.

Company Earnings Reports

The quarterly reports, from most companies, keep being presented in the positive and surprising analysts’ predictions which are helping, in some way, to decrease the decline imposed by the bears on the market. These following companies have presented earnings reports that exceeded the analysts’ expectations. These are:-

• Home Depot (HD)

• Saks Inc. (SKS)

• Abercrombie & Fitch (ANF)

• Sina Corporation (SINA)

• Wal-Mart Stores (WMT)

Wal-Mart Store

Wal-Mart Stores Inc's (WMT)

Wal-Mart Stores Inc's (WMT) quarterly results beat Wall Street expectations, as a curb on costs helped the world's largest retailer overcome weaker U.S. same-store sales, sending shares up 3 percent.

The costs cuts on everything from labor to transportation helped the company fund "rollbacks" on prices for thousands of items in recent weeks, as it tries to hold onto customers pressured by high unemployment and rising gasoline prices.

Wal-Mart's expenses rose 3.9 percent during the quarter, but that was well below a 5.9 percent increase in sales, helped by international markets like Brazil, China and Mexico. Sales at its U.S. discount stores open at least a year fell a worse-than-expected 1.4 percent.

"If they can leverage expenses in this environment where their (U.S.) same-store sales are so soft, imagine what can happen if they put up a 2 to 3 percent pace of same-store sales increases," Edward Jones analyst Matt Arnold said.

For the time being, Wal-Mart paints a bleak view of its U.S. customers, saying that the use of foods stamps and other government benefits to pay for its goods is up significantly from a year earlier.

"More than ever, our customers are living paycheck-to-paycheck," Chief Financial Officer Tom Schoewe said during a conference call with reporters.

WMT -May 18, 2010

The company reported earnings of $3.32 billion, or 88 cents a share, for the fiscal first quarter that ended April 30. That compares with $3.03 billion, or 77 cents a share, a year earlier and came in ahead of the 85 cents per share expected by analysts, according to Thomson Reuters I/B/E/S.

Highlighting the precarious state of U.S. consumers, Wal-Mart also forecast that second-quarter earnings could fall short of Wall Street estimates and said its U.S. same-store sales for the period could drop.

Within minutes of reporting results, Wal-Mart also announced a new onslaught of price cuts on groceries, offering an average discount of 30 percent for a basket of 22 top food and household products.

Company News and Other Items of Interest:

• Clear Harbors Inc. (CLH) said that its quarterly revenue will top expectations.

• Fidelity Information Services Inc. (FIS) fell dramatically after its pending takeover collapsed.

• In the government's initial response to the "flash crash," the SEC proposes new circuit breaker rules to tame volatility in individual stocks, including a pause in trading certain stocks if the price moves 10% or more in a five-minute period.

• The Senate rejects an amendment to the financial reform bill that would have prohibited naked credit default swaps.

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