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Stocks Fall; China, Upbeat Jobs Data in Focus

Jeremy Glaser

U.S. Market
Stocks fell this morning as investors considered upbeat U.S. jobs data and disappointing trade numbers from China. Technology shares were hit particularly hard.

Initial unemployment claims fell 32,000 last week to 300,000. Claims are now at the lowest level since May 2007. Economist had expected a much more modest decline to 320,000 claims. The less-volatile four week moving average of claims dropped 4,750 to 316,250.

Import prices rose by a larger-than-expected 0.6% in March from February levels. The 21.7% boost in imported natural gas prices were a major contributor to the increase. Prices are down 0.6% on a year-over-year basis reflecting a benign global inflation environment.

China said that its exports fell 6.6% in March year-over year, while imports dropped 11.3%. The weak data stoked fears of a slowdown in Chinese economic growth. Separately, the Chinese government said it is planning to expand access to the country’s mainland stock market to foreign investors.

At midday the Dow, S&P 500 and Nasdaq were down 0.5%, 0.9% and 1.8% respectively.

Stocks on the Move
Bed Bath & Beyond’s (BBBY) fourth-quarter results were largely in line with previously announced expectations. Sales fell nearly 6%, lapping a 53-week year in 2012 and digesting the headwinds of multiple store closures due to inclement weather (estimated to cost $0.06-$0.07 per share). Same-store sales increased 1.7% on top of 2.5% in the year-ago period, which was after slicing off an estimated 2%-2.5% for the closures. The gross profit margin fell 50 basis points to 40.5%, as more average weekly coupons were redeemed for higher dollar amounts and lower-margin categories prevailed. Shares fell over 6% on the report.

On Thursday, eBay (EBAY) announced that it has ended its proxy fight with activist investor Carl Icahn ahead of its May 13 annual shareholder meeting, with Icahn withdrawing his proposal to separate PayPal from eBay's Marketplaces business and the company agreeing to appoint Icahn-proposed David Dorman to the board of directors. We view the decision positively, as Dorman brings a wealth of telecommunication and retail experience from his current role as chairman of CVS Caremark (CVS) as well as previous roles as the lead independent director of Motorola Solutions and chairman and CEO of AT&T (T). Shares were down 2.5% at midday.

Foreign Markets
European markets were mixed on the day. In late trading, the FTSE 100 was up 0.1%, the Paris CAC was down 0.7% while the DAX was off 0.5%.

Asian shares mostly shrugged off China’s trade data today. The Nikkei 225 was flat, while the Shanghai Composite and Hang Seng were up 1.4% and 1.5% respectively.