Volatility was low in the markets today. The Dow fell, but the S&P 500 ended flat.
First the scoreboard:
Dow: 14,676, -43.1 pts, -0.2%
S&P 500: 1,578, +0.0 pts, +0.0%
NASDAQ: 3,269, +0.3 pts, +0.0%
And now the top stories:
- The closely followed durable goods report was broadly disappointing. Orders dropped 5.7% in March, which was worse than the 3.0% decline expected by economists. This was largely due to a drop in aircraft orders. "We are beginning to see some effects of sequestration as new orders for defense goods fell -29.3% in March which puts nominal defense spending in the month ($6.6 billion) at its lowest level since January 2006 ($5.3 billion)," noted Deutsche Bank's Joe LaVorgna.
- Orders for nondefense capital goods excluding aircraft and parts (a.k.a. "core capex") climbed 0.2%. Economists were looking for a 0.3% increase. This measure is considered to be a better indicator of business investment activity. This was "a mild positive amidst an otherwise drab report," added LaVorgna.
- The question going forward "is how much of the miss is attributable to external factors compared to domestic issues," said Miller Tabak Chief Economic Strategist Andrew Wilkinson.
- This durable goods number only adds to the lackluster economic reports that are piling up. Meanwhile, earnings announcements have been disappointing and stock market valuations are near recrod highs. Yet stocks sit near their all-time highs.
- "[D]uring the current earnings season, US corporations continue to announce dividend increases and more share buybacks," said stock market guru Ed Yardeni as he rationalized the rally. "Previously, I’ve shown that this corporate cash flow into the stock market--which totaled $2.1 trillion for the S&P 500 since stock prices bottomed during Q1-2009 through Q4-2012--has been driving the bull market since it began."
- After the closing bell yesterday, Apple announced earnings that were stronger than expected thanks to healthy iPhone and iPad sales. Management also raised its quarterly cash dividend by 15% and cranked up its share buyback plan by $50 billion. However, guidance was a bit light. The stock ended modestly positive for the day.
- Automaker Ford had a healthy first quarter. The company earned $0.41 per share, which was better than the $0.38 expected by analysts.
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