S&P 500 Makes a New High, Jobless Claims Revert to the Mean

Minyanville

The S&P 500 continued breaking toward new highs, closing at 1593.37 today. An initial spurt of buying broke it above yesterday's high and it more or less remained there for the rest of the day. Telecom was the leading sector today, gaining 1.17%. Weekly initial jobless claims dropped back to 346,000 from the prior week's 388,000. The Labor Department attributed the drop to seasonal adjustments with the Easter holiday. The 4-week moving average remains at 358,000, near the median of the prior two weeks.

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Microsoft (MSFT) took a 5% hit following atrocious first quarter PC sales. The stock was downgraded by Goldman Sachs, Nomura, and BGC Partners. Yesterday, IDC and Gartner reported a 14% and 11.5% annual drop in US PC sales. Windows 8 was a notable poor performer.

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Nvidia (NVDA) increased its stock buyback plan by $750 million to $1 billion. The company will buy back $100 million in stock this quarter. The $1 billion in stock buybacks equates to about 9.5% of the company's total outstanding stock. Earlier in the day, Nvidia's CEO noted that business activity in the first half of the year had been muted, sending the stock 4% lower, so the buyback was likely a way to help save the stock price.

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The Treasury reopened $13 billion of 30-year bonds at a yield of 2.998% with demand on the weaker side at 2.49 bid-to-cover vs. the 2.57 long-run average, though direct bidders showed increased participation. This month's auction was 25 basis points richer than last month's.

Tomorrow's Financial Outlook

Earnings season picks up tomorrow with Wells Fargo (WFC) and JPMorgan (JPM) in the pre-market, though the highlight of the day will be March retail sales. Economists are expecting retail sales to slow to a flat pace from the month prior, citing slowdown in wage growth, a poor payroll report last Friday, and cheaper fuel prices. In the first two months of the year, retail sales grew at monthly rates of 0.2% and 1.1%, partly due to higher fuel prices and continued spending from consumers. The other economic reports include the Producer Price Index and the first estimate of April University of Michigan's Consumer Confidence Index.

Globally, the only report on the calendar is eurozone industrial production. In February, industrial production is expected to grow at 0.2% month-to-month, which is down 2.5% from the year prior.

Twitter: @Minyanville

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