Stocks sold off again Thursday as those darn 10 year yields continued to vex market observers. The S&P 500 fell 0.94% and the NASDAQ 0.76%, although both were well off the lows of the day. Famed hedge fund manager David Tepper who has been extremely bullish since 2009 told a conference in Las Vegas that he is a bit cautious now and that set the tone today, along with the move in bonds. We had a bunch of economic news and most of it was “meh”:
Consumer prices ticked up 0.3 percent in April, as expected, signaling some inflation in the economy. Industrial production slid 0.6 percent, disappointing estimates for a gain of 0.2 percent. Adding to negative news, home builder sentiment weakened slightly in May. On the plus side, jobless claims declined 24,000 to a seasonally adjusted 297,000, according to the Labor Department. That was the lowest reading since May 2007
Here are the indexes – same comments as we’ve had recently; the S&P 500 is ok as it has been range bound for a few months but the NASDAQ is not acting well.
This is probably the most important chart right now – that of the 10 year yield. Yesterday it broke support #1 (top dotted line) and today it immediately fell to support #2 (bottom dotted line). But you can see why it bounced there … someone who doesn’t use technical analysis would not. Now, with that said, this is usually not a fast moving chart except in periods of crisis, so maybe that was the bottom in yields. However, if it that support #2 breaks in the coming weeks you might see some panic on Wall Street.
Here are some individual charts per MarketSmith:
First the emerging markets ETF (EEM) – while it sold off today this has been an area of strength the past month while U.S. markets scuffle.
Next, Walmart (WMT) which report this morning – they missed both on the top and bottom line, blaming weather. Guidance was not great either.
The retailer said it expects adjusted per-share earnings for the current quarter of $1.15 to $1.25, missing analyst expectations of $1.28 a share. Wal-Mart also posted disappointing first-quarter results.
Cisco Systems (CSCO) had a far better day post earnings – large cap of course, which is in favor. The data was no great shakes, but it is all relative.
Cisco Systems rallied after the network equipment maker handed in fourth-quarter revenue guidance that topped Wall Street estimates. The maker of networking gear posted fiscal third-quarter earnings that beat estimates. In the earnings call, Cisco said it expects current-quarter revenue to fall 1% to 3% from the prior year, less than the 6% drop forecast by analysts.
Vipshop Holdings (VIPS) is a discount online Chinese retailer which had a huge day on earnings. You can see while it is a NASDAQ stock it held up quite well during the NASDAQ selloff.
Vipshop Holdings (VIPS) stock rose Thursday after the China-based online discount retailer late Wednesday reported first-quarter earnings that beat consensus estimates and raised Q2 guidance.
Last, it is worth showing the ETF for solar stocks (TAN). Why? If there is any group that best showcases momentum/smaller cap stock investing it is this group. We can see it is in a horrid setup, so it is one of those charts to watch to see if there is a turn coming for the type of stocks that exhibit risk taking.