Overnight, equity futures remained up about 8 points, but sold off quickly once the market officially opened for trading as Treasuries rallied to the high of the day. The S&P 500 (^INX) reached an intraday low of 1,548 in the opening hour before rallying back to close at the high of the day around 1,563. Notable early laggards were the homebuilders, materials, and industrial sectors. Much of this weakness was attributed to weakness in Caterpillar's (CAT) first-quarter earnings, which included significantly lowered full-year revenue and EPS guidance. However, much of the weakness in Caterpillar's earnings and guidance was attributed to a decline in mining equipment demand, something we've already seen show up in lower commodity prices. Demand for industrial equipment remained flat quarter-to-quarter. Caterpillar also announced a $1 billion share buyback, which obviously helped its positive performance after the report. Existing home sales fell 0.6% month-over-month in March to an annualized rate of 4.92 million homes, mostly due to a decline in the more volatile multi-family home market, while single family homes declined marginally. Existing home supply rose to 4.7 months from 4.6 months in February. Median home prices rose to $184,300 from $173,200 the month prior. Hedge fund ValueAct took a $1.8 billion stake in Microsoft (MSFT), making it the top holder of the tech stock. At an investing conference today, ValueAct's team noted that the stock had plenty of room to grow to the upside, including in its recurring business lines. Microsoft closed up 3.6% on the highest volume in the last 52 weeks.
Tomorrow's Financial Outlook
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There is more housing data on tap for tomorrow. In the morning, the April Richmond Fed regional manufacturing survey and March new home sales will be released. Month-to-month, new home sales are expected to grow 1.2% to an annualized rate of 416,000 homes. The prior month saw a monthly decline of 4.6% to 411,000. The Richmond Fed manufacturing survey's diffusion index is expected to decline to 2 from 3 in March. Last month's survey declined from 6 to 3 due to a drop in capacity and new order volume. Globally, China will release its manufacturing PMI via HSBC's flash index. China data is expected to remain moderate with the index showing a reading of 51.5 from the prior month's 51.6. In Europe, the first estimate of the eurozone's composite manufacturing index is expected to remain unchanged at 46.5 in April from the month prior. US earnings will be quite robust this week. While there are over 20 reports scheduled for tomorrow, notable ones include AT&T (NYSE:T), Apple (AAPL), Delta Air Lines (DAL), Panera Bread (PNRA), and Lockheed Martin (LMT).