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Stocks Retreat From Highs, Fed Stays Flexible

Dan Berman
Hot Stock Minute

Stocks ended the day 1% lower across the board pressured by the Fed, weak economic data, and some earnings misses. The Federal Reserve announced it will stay the course with its $85 billion monthly asset purchase program. In the latest FOMC statement released this afternoon, the Fed stressed that it is flexible and willing to reduce or increase the pace of asset purchases as economic conditions warrant.

Meanwhile, the ADP Payroll report for April showed just 119,000 new private sector jobs for the month. Estimates were for about 155,000 new jobs. A separate report on growth in manufacturing from the Institute of Supply Management showed activity slowing in March and falling below estimates. A third report from the Commerce Department showed construction spending down 1.7% in March, when predictions were for a gain of 0.7%.

Merck (MRK) shares fell nearly 3% following what appears to be the pattern for the quarter with its earnings report. The pharmaceutical giant beat on earnings though it missed on revenue. The company says it made 85-cents a share excluding items, when the consensus had been for 79-cents. Revenue was hurt by competition from generic versions of the company's asthma drug Singulair. Merck says it was also hurt by a stronger dollar.

Three media companies had one thing in common this morning: a penny beat on their quarterly earnings reports despite a miss on revenue. The companies in question are Comcast (CMCSA), Time Warner (TWX), and Viacom (VIA). Shares of both Comcast and Viacom both rose. However, Time Warner dropped nearly 0.5%. It missed the most on revenue of all three, generating $200 million less than estimates.

Shares of T-Mobile US climbed in their debut on the NYSE. The company began trading this morning under the symbol (TMUS). The new entity reflects completion of its merger with MetroPCS. The corporation remains the country's fourth largest cellular company, but now with 40 million customers. Deutsche Telekom, the parent of T-Mobile, still has a 74% stake in the new entity.

Dreamworks (DWA) soared over 7% after topping earnings estimates. The company posted a profit of 7-cents a share when estimates were for 3-cents. Revenue was about 35% above the consensus. You can thank "The Croods" the animated blockbuster that's made nearly $500 million dollars since its release. Dreamworks shares are up 25% year-to-date.