Stocks stage a comeback
Stocks managed to climb higher midday after seeing a sell off earlier in the session, as investors digested a slew of economic data and mixed earnings reports.
At 12:45 p.m. ET, the Russell 2000 (NYSE:IWM) had gained 8.44, or 1.19%, at 716.55, while the Dow surged 135.07, or 1.06%, to 12,898.29.
At 10 a.m. ET, the Census Bureau reported new homes sales in March plummeted to an annual rate of 526,000, the lowest level in 16.5 years, sending stocks cascading lower this morning. Sales were below the 585,000 that economists were forecasting and represented a 36.6% plunge from the March 2007 level of 830,000, and a 8.5% slide below the revised February rate of 575,000.
In keeping with the downbeat economic news, durable goods orders for the month of March declined for the third consecutive month, decreasing $0.7 billion or 0.3% to $212.2 billion, the U.S. Census Bureau said this morning. This is the longest succession of decreases since the last recession in 2001.
In contrast, applications for unemployment benefits fell by 33,000 to 342,000 for the week ended April 19, the Census Bureau also reported this morning. It should be noted that the weekly claims figures are often volatile, and even though today’s headline number was better than the forecast, the claims numbers still point to extensive layoffs and a rise in the unemployment rate.
Corporate earnings continued to take the focus of the week, lifting equities higher mid-session.
In large-cap headlines, Ford (NYSE:F) swung to a surprise $100 million profit in the first quarter, beating the consensus on Wall Street, while ConcoPhillips (NYSE:COP) also reported favorable first-quarter earnings on inflated oil prices. T. Rowe Price Group Inc. and Aflac Inc. propelled financial shares higher after each reported better-than- expected earnings.
In contrast, Motorola (NYSE:MOT) clocked a wider loss in the first quarter on a 39% drop in handset sales. Starbucks Corp. (Nasdaq:SBUX) missed the forecast and continues to be pummeled today, trading down 11% midday. In addition, Amazon.com Inc. (Nasdaq:AMZN) had sloppy results and was down 3% early afternoon.
Within the small-cap spectrum, Stamps.com Inc. (Nasdaq: STMP) gained 16% midday after the provider of Internet-based postage services released first-quarter results that trumped the consensus estimates on Wall Street and issued 2008 guidance whose range topped analysts’ estimates. Mercury Computer Systems, Inc. (Nasdaq:MRCY) surged 17% early afternoon after the computing systems and software provider surprised by swinging to a fiscal third-quarter profit. Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) also gained ground after reporting first-quarter results that beat the Street.
On the downside, Monarch Casino & Resort, Inc. (Nasdaq:MCRI) tumbled 26% midday after the owner of the Atlantis Casino Resort Spa in Reno, Nevada, reported first-quarter results that declined from a year ago and missed analysts’ estimates. AmericanWest Bancorp. (Nasdaq:AWBC) skidded 23% after the Spokane, Wash.-based regional bank announced early Thursday that it swung to a first-quarter loss due to charges, expenses and loan loss provisions. VASCO Data Security International, Inc. (Nasdaq:VDSI) down 20% after the Oakland Terrace, Ill.-based maker of computer hardware reported early Thursday that its first-quarter revenue rose modestly from a year earlier and beat Wall Street analysts’ mean estimate.
Crude oil was slightly lower midday at roughly $117 a barrel, while gold slumped $13.1 to $895.9.
Overseas, China’s government slashed its so-called stamp duty tax on trading stocks after the Shanghai Composite index fell below the 3000 level.
“We believe China equities have bottomed,” Roth Capital Vice Chairman, Donald Straszheim wrote in an email this morning. “With equities down 38% year-to-date, and down 47% from the October peak, China equities have become much more attractive.”
