Market Overview

Mid-Morning Market Update: Produce Prices See Largest Dip in Three Years, Core PPI Up

Mid-Morning Market Update: Produce Prices See Largest Dip in Three Years, Core PPI Up
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Following the market opening Wednesday, the Dow traded down 0.10 percent to 15,199.67, while the NASDAQ rose 0.03 percent to reach 3,463.75. The S&P fell 0.09 percent to 1,648.89.

Top Headline
US producer prices saw their biggest dip in three years in April, with food and gasoline costs dropping. This decline points towards weak inflation pressures, which many analysts believe should allow the Fed some flexibility to keep the monetary policy fairly accommodative.

The Labor Department stated on Wednesday that its seasonally adjusted producer price index declined 0.7 percent in April, the largest decline since February 2010. Wholesale prices had dipped 0.6 percent in March.

Core PPI was up 1.7 percent in the 12 months through April, after advancing by the same margin in March. Consumer inflation was muted in March, a trend that is likely to continue through the year, given the lacks of pipeline price pressures in the offing.

All this is likely to give the Federal Reserve some room to continue with its monthly purchase of mortgage and Treasury bonds worth $85 billion in an attempt to keep interest rates low while speeding up job growth.

Equities Trading UP
SunPower Corporation (NASDAQ: SPWR) shot up, gaining 11.67 percent to $21.25 after SunPower announced that it expected to return to profits in 2013 after a three year gap due to increased revenue from large solar power plants and rooftop systems.

Cal Dive International Inc (NYSE: DVR) was also up 31.21 percent to $2.17. Cal Dive has received two additional pemex contracts that are expected to generate combined total revenues of about $188 million.

Trina Solar Limited (NYSE: TSL) got a boost, shooting up 11.09 percent to $6.01. Although Trina Solar has reduced its Q1 shipping outlook by 5%-9%, analysts at Nomura believe that the company's gross margins are likely to rise 8-10 percentage points in Q2.

Equities Trading DOWN
Direxion Daily Gold Miners Bull 3X Shrs (NYSE: NUGT) shares tumbled 9.93 percent to $9.73. Direxion's year-to-date return stands at -48.77%.

The ExOne Company (NASDAQ: XONE) was down, falling 9.05 percent to $44.20, after ExOne reported weaker than expected results for the most recent quarter, with higher than expected loss per share and lower than expected revenues.

Western Asset Mortgage Capital Corporation (NYSE: WMC) was down 7.93 percent to $19.86. Western Asset Mortgage Capital reported its Q1 earnings in-line with the consensus estamte of $0.93.

In commodity news, oil traded down 1.20 percent to $93.08, while gold dropped 0.97 percent to $1,410.70.

Silver traded down 2.16 percent Wednesday to $22.88, while copper fell 1.52 percent to $3.24.

European shares were mixed in early trade following the weaker than expected GDP data from the eurozone and the Bank of England's Quarterly Inflation Report. The Spanish Ibex Index rose 0.55 percent and the Italian FTSE MIB Index declined 0.02 percent. Meanwhile, the German DAX fell 0.1 percent and the French CAC 40 declined 0.23 percent while U.K. shares shed 0.21 percent.

MBA Purchase Applications were announced Wednesday, with the significant increase in rates bringing down mortgage activity sharply for the week of May 10. The purchase index was down from its muylti-year high by 4%, with the refinance index falling 8%.

Headline Producer Price Index fell due to a decline in food and gasoline prices. In-line with expectations, the headline PPI fell 0.7% in April, while the core PPI, which excludes food and energy, rose 0.1%.

The Empire State Manufacturing Index declined by more than 4 points in the May report to -1.43. This is the first negative reading since January 2013 and points to a marginal month-to-month contraction.

The Treasury International Capital report showed that US accounts bought more foreign securities in March, as compared to foreign accounts buying US securities. Outflow in long-term securities contracted by $13.5 billion from the February levels.

Overall industrial production fell 0.5 percent in April, after gaining 0.3 percent in March. The April results missed the market expectations of a rise of 0.2 percent. The manufacturing component declined 0.4 percent in April, following a 0.3 percent decline in March.

Posted-In: Earnings News Guidance Commodities Econ #s Economics Hot Intraday Update


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