Courtesy of Blain.
Wednesday was another session where indexes opened down and buyers never really showed up. The S&P 500 fell 0.59% and the NASDAQ 0.79%. This despite a pretty positive print in the ISM data: ISM non-manufacturing for April was 55.7, above expectations and rising from March’s 54.5 print. The employment index rose to 53.0 from 50.3 the prior month. Factory orders rose a more-than-expected 1.1% in March. The ADP employment report for April missed expectations with a gain of 156,000.
“I’m definitely seeing a momentum shift and this market has seemed like a momentum-driven market these few months. If momentum does shift it feels like there’s not enough economic foundation and initiatives, what the Fed is going to do. … This is a pretty good challenge point for the market,” said Daniel Deming, managing director at KKM Financial.
The flurry of data continued to “paint a picture that can be described as ‘growth purgatory,’” said Michael Arone, chief investment strategist at State Street Global Advisors. According to Arone, the U.S. economy is “stuck in low and slow gear” where data constantly miss expectations but they are not bad enough to indicate a recession is on the horizon.
The S&P 500 broke thru the 20 day and is now looking to test the 50 day moving average. We stated earlier this week the NASDAQ – which already looked weak – would be in even more trouble with a close below our trend line in blue which connects multi year lows. We are on that line now.
The NYSE McClellan Oscillator has been in the red for a few days now – and is now approaching an oversold level.
Tesla Motors (TSLA) cracked its 200 day moving average during the normal session on the loss of some key executives, but rallied a few percent to get back near $230 in after hours on earnings.
Tesla reported Q1 results that were largely in line with expectations. The electric car maker reported an adjusted net loss of $75 million or $0.57 per share, which was a bit better than analysts’ expectation for net loss of around $0.60 per share. This is a big improvement from the net loss of $282 million or $2.13 a year ago.
Net revenue jumped 45% to $1.6 billion, which was in line with expectations. The company had a gross profit margin of 22%, which was a bit better than the 21% expected.
Priceline (PCLN) took a hit on guidance.
Priceline reported better-than-expected first-quarter earnings Wednesday, yet the travel giant’s stock was down on weak forward-looking guidance. The company said its growth would slow in the second quarter as it spends more on marketing and as timing of holidays shifts traveler bookings. Priceline expects bookings to rise as much as 18% in the second quarter; its Q2 guidance was $11.60 to $12.50, below the consensus estimate for $14.98.
Under Armour (UA) dropped nearly 8% in heavy volume. It announced the resignations of its chief merchandising officer and its chief digital officer
This breakout failure in the biotech ETF (IBB) is ugly.
Emerging markets have fallen off a cliff these past 2 sessions as “risk off” is back in vogue.
Key earnings Thursday include: Alibaba, Merck, Chesapeake Energy, Regeneron, MGM Resorts, Dreamworks Animation, El Pollo Loco, FireEye, Herbalife, and Yelp.
