Stock Market News for April 26, 2011

Markets on Monday slipped marginally amidst tight volumes as inflationary worries crept in, suggesting lower profits in the quarters ahead. However, positive economic data limited the losses and investors now await the first of Fed Chairman Ben Bernanke’s four annual press conferences on Wednesday, which will decide the fate of the bond-purchase program.

The Dow Jones Industrial Average (DJIA) and the Standard & Poor 500 (S&P 500) shed 0.21% and 0.16% to close at 12,479.88 and 1,335.25, respectively. Nonetheless, the tech-laden Nasdaq Composite Index gained 0.20% and finished the day at 2,825.88. The fear-gauge CBOE Volatility Index (VIX) was up 7.4% and decliners outnumbered the advancers on the New York Stock Exchange. Easter Monday kept the shutters down on many markets and that led to significantly lower volumes. Consolidated volumes on the New York Stock Exchange, the American Stock Exchange and Nasdaq were 5.4 billion shares, comprehensively below the daily average of 7.74 billion.

Low volumes can also be attributed to the reluctance of investors to bet big bucks ahead of the Federal Reserve’s policy meeting on April 27. The meeting will expectedly come to a decision about the $600 billion bond-purchase program, which is supposed to end in June. Market watchers believe that the meeting will bring the asset-purchase plan to a close. However, higher energy and food prices and a higher unemployment rate may force the extension of the plan.

Investors’ sentiments were mostly bearish as inflating input costs fueled concerns about lower profits in the upcoming quarters. Kimberly-Clark Corporation (NYSE:KMB - Analyst Report) reported lower-than-expected earnings of $1.09 share, which also dipped 4.38% from the year-ago quarter. First-quarter net income slipped 9% as higher input costs took a toll on its profitability. The company further inflated estimates of input costs and said it will increase the price of certain products. Share prices dropped 2.7% and settled at $64.24 per share.

Advanced Micro Devices, Inc. (NYSE:AMD - Analyst Report) and Johnson Controls Inc. (NYSE:JCI - Analyst Report) also posted disappointing earnings results. Shares of the companies slipped 0.1% and 2.8%, respectively. AMD managed to beat expectations and also recorded a jump in revenues and net income.  But the stock was unlucky not to climb higher, despite the favorable results, as it suffered in comparison with the robust results posted by companies like Intel Corporation (NASDAQ:INTC - Analyst Report), International Business Machines Corp. (NYSE:IBM - Analyst Report) and Apple Inc. (NASDAQ:AAPL - Analyst Report). AMD also remains a step behind on product introductions when compared with its rival Intel Corp.

Meanwhile, Johnson Controls reported a 31% increase in profit to $383 million (excluding non-recurring items) in the second quarter of fiscal 2011 from $292 million (excluding non-recurring items) in the same quarter of the previous year. Profits improved 30% to 56 cents from 43 cents per share in the prior year. Despite the increase, shares slid 2.8% and closed at $39.60 as investors were expecting a bigger jump.

On a sector-wise basis, the financial sector edged down and the Financial Select Sector SPDR dropped 0.1%. Shares of U.S. Bancorp (NYSE:USB - Analyst Report), The Goldman Sachs Group, Inc. (NYSE:GS - Analyst Report), JPMorgan Chase & Co. (NYSE:JPM - Analyst Report) and Citigroup, Inc. (NYSE:C - Analyst Report) dipped 0.4%, 0.9%, 0.2% and 0.7%, respectively.

Nonetheless, losses were held in check as the Commerce Department reported a 11.1% jump in new home sales in March. New Home Sales for March increased to a 300,000 annual pace, following a revised 270,000 pace in February. However, New Home Sales are down 21.9% from 384,000 recorded in March of 2010.

Coming back to the earnings season, 80% of the 124 S&P 500 companies that have reported their results so far have managed to top estimates. This compares favorably with 73% of companies managing to surpass estimates in the last quarter. After two-weeks of the earnings season and with the last week being considerably encouraging, investors were somewhat disappointed with the results on Monday. Significant companies whose results are awaited today include AK Steel Holding Corporation, Amazon.com Inc., Broadcom Corp., The Coca-Cola Company, 3M Co, Valero Energy Corp. and Wipro Ltd. Looking ahead into the week, investors will hope to recoup the losses incurred on Monday, on the back of robust reports to be released over the remaining four days of the week. Movement in the markets will also depend to a large extent on the Fed policy meeting and press conference. In all, it’s a busy and interesting week ahead.

Read the full analyst report on KMB

Read the full analyst report on AMD

Read the full analyst report on JCI

Read the full analyst report on INTC

Read the full analyst report on IBM

Read the full analyst report on AAPL

Read the full analyst report on USB

Read the full analyst report on GS

Read the full analyst report on JPM

Read the full analyst report on C