MARKETS AT A GLANCE
LAST CHANGE % CHG
DJIA 17928.2 -142.2 -0.79%
Nasdaq 4939.33 -77.6 -1.55%
S&P 500 2089.46 -25.03 -1.18%
Japan: Nikkei 225 19531.63 11.62 0.06%
Hang Seng 27755.54 -368.28 -1.31%
Shanghai Composite 4298.71 -181.76 -4.06%
S&P BSE Sensex 27440.14 -50.45 -0.18%
Australia: S&P/ASX 5826.5 -1 -0.02%
UK: FTSE 100 6927.58 -58.37 -0.84%
PRICE CHG YIELD
U.S. 2 Year -1/32 0.627
U.S. 5 Year -7/32 1.552
U.S. 10 Year -11/32 2.187
Australia 10 Year -30/32 2.805
China 10 Year -8/32 3.46
India 10 Year 0/32 7.854
Japan 10 Year -9/32 0.361
German 10 Year -1 7/32 0.522
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.7942 0.0105
Yen (USD/JPY) 119.86 -0.27
S. Korean Won (USD/KRW) 1080.59 -1.24
Chinese Yuan (USD/CNY) 6.2078 -0.0022
Euro (EUR/USD) 1.1185 0.0037
WSJ Dollar Index 85.47 -0.41
LAST CHANGE % CHG
Crude Oil 60.76 1.83 3.11%
Brent Crude 67.63 1.18 1.78%
Gold 1192.1 5.3 0.45%
(Data as of approximately 5 p.m. ET)
SNAPSHOT:
U.S. stocks fell Tuesday, pulling back after the S&P 500 index's biggest two-session advance in more than a month. Treasurys fell for a seventh straight session as oil prices rose. The dollar weakened as signs of U.S. growth declined. Gold rose as investors bet the U.S. economy would continue to wobble.
OPENING CALL:
China on Wednesday will release its HSBC non-manufacturing purchasing managers index data for April.
China's services sector is increasingly important for an economy that's transitioning to a consumer-led demand model. Although last week's CFLP non-manufacturing report kept the expansion in place, it was softer than the prior month's.
EQUITIES:
U.S. stocks fell, pulling back after the S&P 500 index's biggest two-session advance in more than a month.
The decline, which steepened in late-afternoon trading, was led by recent stock-market darlings: technology and small-company stocks.
On Tuesday, the Dow Jones Industrial Average declined 142.20 points, or 0.8%, to 17928.20 and the S&P 500 fell 25.03 points, or 1.2%, to 2089.46.
The Nasdaq Composite, which has been a market leader in recent months, lost 77.60 points, or 1.55%, to 4939.33. Similarly, the small-cap benchmark Russell 2000 index, which had been outpacing the broader market, fell 1.4%.
The retreat in equities was to be expected, traders said. Stocks have continued to trade in a narrow range, keeping a lid on gains for the year. The S&P 500 had risen 1.4% over the last two sessions, its largest two-day gain since March 30, and within striking distance of its record close. Through Tuesday's close, the S&P 500 is up 1.5% for the year, and the Dow has risen 0.6%.
"Investors are a bit skittish right now," said Kate Warne, investment strategist at Edward Jones. "While the trend is still higher and underlying fundamentals support a rising market, unlike the last 3 1/2 years where we've seen equities rise to a series of new highs, now we're seeing many more 100-point days up and down."
She added that investors are overall still putting money into U.S. stocks, and "they're not really excited about the process."
In corporate news, shares of Vornado Realty Trust fell 3.7% after higher rental revenue and the spinoff of its shopping centers drove the company's profit and revenue growth in the first quarter.
Shanghai shares suffered their second largest daily fall this year on Tuesday, putting a halt to the market's 39% year-to-date rally.
FOREX:
The dollar fell against the Japanese yen and the euro after trade data indicated a larger drag on U.S. growth than initially estimated, raising the likelihood the Federal Reserve won't raise borrowing costs soon.
The dollar slid 0.3% versus the common currency in late-afternoon trade, with one euro buying $1.1186, erasing early morning gains.
The U.S. currency declined 0.3% to Yen119.86, after rising as high as Yen120.51. The Wall Street Journal Dollar Index, which compares the dollar against a basket of widely traded currencies, fell 0.5% to 85.48, and has dropped 4.3% from a 12-year high reached in March.
The dollar continued along a downward path it has been taking for much of the past seven weeks as soft data and weak U.S. growth shelved market expectations for a midyear increase in interest rates, which would make the dollar more alluring to investors. On Tuesday, the dollar drifted lower after U.S. imports outweighed exports by the largest gap since October 2008, the Commerce Department said.
The expanding trade deficit represented "another sell signal for the dollar as the U.S. economy is weak, there is no need for the Fed to tighten, and dollar bulls are now running out of reasons to stay the course," Jonathan Lewis, portfolio manager of the Samson Strong Nations Currency Fund and chief investment officer at Samson Capital Advisors, said in a research note.
Normally, the U.S. trade deficit generates little reaction in the currencies market. But the data nipped a modest dollar rally in the bud Tuesday morning as investors recalled that the Fed mentioned U.S. exports in its March and April policy meeting statements.
Making a direct reference to exports shows the Fed is watching how U.S. trade performs, so monthly trade numbers are becoming more important for the currency market and the dollar's performance, said Brian Daingerfield, currency strategist at RBS Securities.
In addition, the largest trade deficit in more than six years augurs poorly for the next revision of U.S. first-quarter gross domestic product growth.
"Markets are trying to figure out if the moderation in U.S. data is likely to reverse or be more prolonged," Mr. Daingerfield said. "There's quite a bit of uncertainty over the path of the U.S. economy, and so we're seeing more sensitivity around trade-related numbers."
BONDS:
Government bond yields on both sides of the Atlantic rose to multi-month highs on Tuesday as an upbeat U.S. service-industry release and a rally in crude oil prices sapped appetites for haven assets.
U.S. Treasury bond prices dropped for a seventh consecutive session, the longest losing streak since June 2013 when the bond market was rattled by anxiety over reduced bond buying from the Federal Reserve. The yield on the benchmark 10-year note rose to the highest level in two months. Bond prices fall as their yields rise.
The yield on the 10-year German government bond rose to the highest level since the end of last year. The yield on the 10-year U.K. government debt climbed to a five-month high.
The weeklong selloff represents a moderate setback for the high-grade debt markets whose prices have soared since the start of 2014. The gloomy sentiment toward global growth and deflation prevailing earlier this year has been easing off lately, reducing the attractiveness of haven bonds yielding near historical low levels.
"The bond market is saying that monetary stimulus from the central banks are starting to gain traction and that we are going to have a better growth outlook," said Jack McIntyre, portfolio manager at Brandywine Global Investment Management, which has $70 billion in global assets under management.
COMMODITIES:
U.S. oil prices surged above $60 a barrel for the first time since December as geopolitical events rattled the market.
Prices gained on news that protesters in Libya had blocked a key port, interrupting more than 100,000 barrels a day of crude production. Growing Libyan production was a key factor behind the oil market's plunge of more than 40% in 2014, but the country's output remains volatile due to unrest.
Later in the day, prices rose further as Saudi Arabia raised the official prices for its crude in the U.S. and Europe, suggesting an increase in demand.
Tuesday's jump extends the strong rally in oil prices, which gained 25% in April. Investors expect the global glut of crude to shrink in the second half of the year due to a sharp drop in drilling activity, an increase in demand and an anticipated decline in U.S. crude production.
The rapid rise in oil prices has boosted energy stocks, making oil-and-gas equities the best-performing sector in the S&P 500 so far this quarter. But consumers are enjoying smaller savings at the pump. At $2.63 a gallon, retail gasoline on Tuesday cost 9.9% more than a month ago, though it was still 28% below the year-ago price, according to AAA.
Some analysts caution that the market is getting ahead of itself and remains oversupplied in the near term, which could force prices lower again in the summer or early fall.
Traders expected that weekly U.S. inventory and production data due Wednesday would show that the buildup in crude-oil inventories was slowing and nearing a peak.
"The rebound has started, full-blown," said Gary Ross, founder of consulting firm PIRA Energy Group. "Demand is going up, supply growth is coming down...This should lead to stronger prices."
The U.S. crude-oil benchmark settled up $1.47, or 2.5%, at $60.40 a barrel on the New York Mercantile Exchange, the highest settlement since Dec. 10. Brent, the global benchmark, gained $1.07, or 1.6%, to $67.52 a barrel on ICE Futures Europe, the highest since Dec. 5.
Gold prices rose, as investors bet the U.S. economy would continue to wobble, forcing the Federal Reserve to keep borrowing costs lower for longer.
TODAY'S HEADLINES:
German Car Makers Preparing Bid for Nokia Mapping Unit
(MORE TO FOLLOW) Dow Jones Newswires
May 05, 2015 17:30 ET (21:30 GMT)
Germany's big-three premium brand auto makers are said to be preparing to launch a formal bid to acquire a majority stake in Nokia's HERE mapping unit, in a consortium that includes Chinese technology group Baidu and values HERE at "considerably more than EUR2 billion."
U.S. Trade Gap Widens on Surging Imports
The trade deficit expanded by 43.1% to a seasonally adjusted $51.37 billion in March, the Commerce Department said. It was the largest monthly percentage increase since December 1996 and the largest deficit reading since October 2008.
Aetna to Stop Covering Routine Use of Morcellator
Aetna will stop covering routine use of the laparoscopic power morcellator this month, marking the most direct blow from a major health insurer to a surgical tool that regulators determined can spread hidden cancer in women.
EU Agrees to Overhaul Carbon-Trading System
The European Union agreed to create a stabilization mechanism for its emissions-trading system in an effort to push up the cost of releasing carbon dioxide into the air and encourage investment in low-carbon technologies.
IMF Speaks of More Potential Financing for Greece
The International Monetary Fund said IMF officials didn't push for large-scale debt relief in recent negotiations for emergency financing for Greece, but rather underscored that more financing would be needed if Athens failed to live up to its original bailout conditions.
EU Says Stimulus, Oil Prices Lift Growth
European Union economists said monetary stimulus and cheaper oil would boost growth in the region this year more than previously forecast but questioned whether the positive momentum would last longer term.
'Frozen' Still Keeps Disney Hot as Earnings Rise
With a much stronger supply chain in place than a year ago, sales of "Frozen" merchandise so far in 2015 are more than 10 times as high as during the same period in 2014, COO Tom Staggs said on a call with analysts.
ISM Non-Manufacturing Index Rises in April
The ISM's non-manufacturing purchasing managers index came in at 57.8 in April, up from 56.5 in March. Forecasters had expected last month's PMI to slow slightly to 56.3.
Sprint Stumbles, But Holds Place in U.S. Wireless Race
Sprint stanched the bleeding in its customer base in the first three months of the year, but concerns about its cash and network upgrade plan raised doubts about its turnaround prospects.
Regulator to Allow Review of Freddie, Fannie CEO Pay
Mortgage-finance companies Freddie Mac and Fannie Mae disclosed that their regulator, the Federal Housing Finance Agency, had authorized them to review the pay of CEOs Donald Layton and Timothy J. Mayopoulos.
RECENT DJ EXCLUSIVES:
UBS Names No. 2 Executive for U.S. Brokerage
Zoetis Won't Tame Pharma M&A -- Heard on the Street
Denbury, Chesapeake Are Beyond the Shale -- Ahead of the Tape
German Car Makers Preparing Formal Bid for Nokia's HERE Map Service With China's Baidu
Microsoft Breaks Through the Cloud -- Heard on the Street
TODAY'S CALENDAR
(Times in GMT, followed by country and event)
2245 NZ Q1 Labour Cost Index (Salary & Wage Rates)
2245 NZ Q1 Household Labour Force Survey
2245 NZ Q1 Quarterly Employment Survey
0130 AUS Mar Retail Trade
0145 CHN Apr China Services PMI
0230 HK Apr Hong Kong Whole Economy PMI
0400 AUS May Monthly Leading Indicator of Employment
0500 IND Apr India Services PMI
0645 FRA Apr Industrial investment survey
0700 EU ECB Governing Council non-monetary policy meeting
0745 ITA Apr Italy Services PMI
0750 FRA Apr France Services PMI
0755 GER Apr Germany Services PMI
0800 EU Apr Eurozone Services PMI
0830 UK Apr UK Official Reserves
0830 UK Apr CIPS / Markit Services PMI
0830 UK Apr Narrow money (Notes & Coin) and reserve balances
0900 EU Mar Retail trade
0900 GER Q2 Ifo Economic Climate for the Euro Area
1000 FRA Mar OECD CPI
1100 US 05/01 MBA Weekly Mortgage Applications Survey
1215 US Apr ADP National Employment Report
1230 US Q1 Preliminary Productivity & Costs
1230 CAN Mar Stocks of Canadian grain at March 31
1300 US U.S. Department of the Treasury's quarterly refunding announcement
1400 US Apr Online Help Wanted Index
1400 CAN Apr Ivey Purchasing Managers Index
1430 US 05/01 EIA Weekly Petroleum Status Report
1500 US Apr Global Services PMI
1500 US ISM Semiannual Report On Business & Economic Forecast
2350 JPN Apr Monetary Base
Access Investor Kit for Vornado Realty Trust
Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US9290421091
(END) Dow Jones Newswires
May 05, 2015 17:30 ET (21:30 GMT)
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