Market Overview

Mid-Morning Market Update: Housing Starts Plummet, Initial Jobless Claims Rise

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Following the market opening Wednesday, the Dow traded down 0.12 percent to 15,257.00, while the NASDAQ rose 0.15 percent to reach 3,476.75. The S&P also fell, declining 0.17 percent to 1,655.95.

Top Headline
Some bad news came in with the economic reports on Thursday, with housing starts dropping sharply and jobless claims rising. Inflation, however, seems under control.

Ground breaking for new homes in the US fell to a higher-than-anticipated degree in April from its almost five-year high. At the same time, applications to build new homes showed that the housing sector might still be able to contribute to the strengthening of the economy.

The US Commerce Department reported Thursday that building starts for homes dropped 16.5 percent in April to an annual rate of 853,000 units, significantly below the analyst expectations of an annual rate of 945,000. The housing recovery, seen in the early part of the year, had begun to drive growth in other segments of the economy.

To add to all this, the Labor Department reported that initial jobless claims rose by 32,000 to a seasonally adjusted 360,000 for the week ended May 11. This was the largest increase since November 2012 and significantly higher than the moderate increase forecasted by Wall Street.

Equities Trading UP
Cisco Systems, Inc (NASDAQ: CSCO) shot up, gaining 13.21 percent to $24.01, after Cisco Systems reported its quarterly earnings above the analyst expectations.

Halozyme Therapeutics, Inc (NASDAQ: HALO) was also up 13.06 percent to $7.62. Halozyme is scheduled to report clinical data from Phase 1b trial of PEGPH20 (PEGylated Recombinant Human Hyaluronidase), an investigational new biologic, at the annual meeting of the American Society of Clinical Oncology (ASCO).

DryShips, Inc (NASDAQ: DRYS) got a boost, shooting up 6.90 percent to $2.00. The trailing twelve month operating margin for DryShips stands at 5.20%.

Equities Trading DOWN
Advanced Micro Devices, Inc (NYSE: AMD) was down, falling 14.85 percent to $3.73. Advanced Micro Devices is witnesses weakness across various areas, including lower than expected ROE, weak operating cash flow, disappointing historical stock performance and high debt management risk.

William Lyon Homes (NYSE: WLH) shares tumbled 11.95 percent to $26.15, after William Lyon Homes raised $217.50 million in a public stock offering.

Oncothyreon Inc (NASDAQ: ONTY) was down 20.69 percent to $2.07. Oncothyreon is scheduled to announce data for its L-BLP25 and PX-866 trials at the annual meeting of the American Society of Clinical Oncology.

Commodities
In commodity news, oil traded up 0.28 percent to $94.56, while gold dropped 1.50 percent to $1,375.40.

Silver traded down 1.12 percent Wednesday to $22.41, while copper fell 0.20 percent to $3.26.

Eurozone
European shares were also mixed overnight on economic data. The Spanish Ibex Index fell 0.15 percent and the Italian FTSE MIB Index rose 0.39 percent. Meanwhile, the German DAX fell 0.2 percent and the French CAC 40 declined 0.31 percent while U.K. shares rose 0.06 percent.

Economics
The Consumer Price Index declined 0.4 percent in April, following a 0.2 percent decline in March. Headline inflation continued its downward trend, although the core rate continued its moderate upward move in April. The Consumer Price Index came in below the analyst expectations of a 0.3 percent decline. housing market index posted an improvement in May, indicating an acceleration in the new home market. The index rose 3 points from the downward revised 44 level reported for April.

Housing starts for April were disappointing, although housing permits were higher than anticipated. Housing starts dropped by a monthly 16.5 percent in April, following an increase of 5.4 percent in March. April starts of an annualized 0.853 million units was also below the analyst expectations of 0.969 million units, although it was up 13.1 percent on a y/y basis.

Jobless claims spiked in the week ended May 11, up by 32,000 to 360,000. This is the highest increase since late March. There does not appear to be any specific reasons for this sudden gain, which raised the 4-week average by 1,250 to 339,250. Despite this increase, however, the figure is still over 20,000 below the month-ago level, while the 4-wwek average is down by a significant 21,000.

The Bloomberg Consumer Comfort Index, a weekly survey of Americans' perception of the state of the US economy, their individual finances and the buying climate, is scheduled to be released Thursday, at 9:45am EST.

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

 

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