Stock Market News for May 17, 2011

The tech-laden Nasdaq Composite Index suffered a heavy fall on Monday, amidst disappointing economic data that subsequently led the markets lower. While investors are apprehensive as the economic stimulus plan nears its end, weakness in economic data furthered fueled investor concerns as New York manufacturing data hit its lowest level in five months.

The Dow Jones Industrial Average (DJIA) shed 0.4% to settle at 12,548.37. The Standard & Poor 500 declined 0.6% to end the day at 1,329.47. The tech-heavy Nasdaq closed lower at 2,782.31, after dropping 1.6%. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes were 6.85 billion shares versus the average of 7.73 billion shares recorded till now in 2011. For each stock that rose on the NYSE, a couple of stocks moved down.

At a time when investors are gripped with fears over the functioning of the economy after the scheduled end of the $600 billion bond-purchase program, latest data on the New York manufacturing growth provided no comfort to them. The Federal Reserve Bank of New York released The Empire State manufacturing survey, which declined to 11.9 this month as against a level of 21.7 recorded last month. This also marks the slowest growth in manufacturing activity in five months. Moreover, the decline comes just a month after the gauge had reached its best performance in a year.

On the other hand, The National Association of Home Builders (NAHB) said that the index measuring the confidence of home builders remained unchanged this month. The index lingered at the low level of 16 and suggested no improvement in the housing sector. The chairman of the NAHB said: “Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook.”

Meanwhile, one of the leading players in the home improvement stores industry, Lowe's Companies Inc. (NYSE:LOW - Analyst Report) posted lower-than-expected first-quarter 2011 results on both top and bottom lines, reflecting a sluggish economic recovery and difficult comparison on account of government stimulus programs that benefited the prior-year quarter. The quarterly earnings of 34 cents a share missed expectations and remained flat compared with the prior-year quarter. Also, the company lowered its fiscal 2011 earnings outlook due to weaker-than-expected results. Lowe’s said that it now expects second-quarter 2011 earnings in the range of 65 cents to 69 cents a share. The company now expects fiscal 2011 earnings between $1.56 and $1.64 per share compared with $1.60 and $1.72 forecasted earlier.

The technology sector was in for a sharp decline on Monday. Among the stocks that declined were, Amazon.com Inc. (NASDAQ:AMZN - Analyst Report), priceline.com Incorporated (NASDAQ:PCLN - Analyst Report), Google Inc. (NASDAQ:GOOG - Analyst Report), Microsoft Corporation (NASADQ:MSFT - Analyst Report), Apple Inc. (NASDAQ:AAPL - Analyst Report) and Dell Inc. (NASDAQ:DELL - Analyst Report) and they shed 5.0%, 3.3%, 2.1%, 1.8%, 2.1% and 2.3%, respectively.

However, on a day when most of the sectors were in the red, airline shares moved higher. Analyst comments about airline companies being benefited due to the drop in crude prices helped lift these stocks. Airline stocks including AMR Corporation (NYSE:AMR), US Airways Group, Inc. (NYSE:LCC - Snapshot Report), Delta Air Lines Inc. (NYSE:DAL - Analyst Report) and JetBlue Airways Corporation (NASDAQ:JBLU - Analyst Report) gained 4.9%, 5.6%, 3.3% and 5.6%, respectively. Earlier, rising crude prices had posed a threat to airlines companies as higher fuel costs would have automatically added to their expenses. Following the crisis in the Middle East, crude prices had soared to a 2.5-year high during the first quarter of the year and had raised concerns about demand-supply dynamics. However, prices have cooled down since late last month and have now fallen below $100 per barrel. On the New York Mercantile Exchange, light crude for June delivery dropped 2.3% to settle at $97.37 per barrel.

The Energy Select Sector SPDR fund shed 0.8% yesterday and major energy shares lingered in the red. Shares of Exxon Mobil Corporation (NYSE:XOM - Analyst Report), Chevron Corp. (NYSE:CVX - Analyst Report), Johnson & Johnson (NYSE:JNJ - Analyst Report), Western Refining Inc. (NYSE:WNR - Analyst Report) and Halliburton Company (NYSE:HAL - Analyst Report) plunged 0.8%, 0.7%, 0.4%, 2.5% and 1.2%, respectively.

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