By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Apple's longest losing streak in 18 years weighs on Nasdaq
U.S. stocks struggled to make substantial headway Monday after a
mixed bag of manufacturing and construction data showed slow but
steady growth in the U.S. economy after a disappointing first
quarter.
The data sparked some appetite for assets, such as equities,
that are perceived as risky ahead of April U.S. jobs data due
Friday, after disappointing earnings and a weak report on
first-quarter economic growth last week led the main three indexes
to post weekly losses.
The S&P 500 was up 5 points, or 0.3%, at 2,070, led by gains
in consumer-discretionary and financial stocks, both up 0.7%.
The Dow Jones Industrial Average gained 55 points, or 0.3%, to
17,827, led by sharp gains in McDonald's Corp.(MCD) and Goldman
Sachs Group Inc.(GS)both up 1.1%.
Meanwhile, the Nasdaq Composite was dipping in and out of
positive territory, as Apple's (AAPL) eighth-straight session
loss--the longest in 18 years--weighed on the tech-heavy index,
last down less than 0.1% to 4,774.
The Institute for Supply Management said its manufacturing index
fell to 50.8% last month
(http://www.marketwatch.com/story/ism-manufacturing-index-falls-to-508-in-april-2016-05-02)from
51.8% in March. Despite the weaker-than-expected results, readings
over 50% indicate more companies are expanding instead of
shrinking. Meanwhile, construction spending rose in March
(http://www.marketwatch.com/story/construction-spending-rises-in-march-2016-05-02),
thanks to a jump in residential building.
The modest drop in the ISM index "is a bit disappointing, but
that April figure is still the second highest reading in the past
eight months," said Paul Ashworth, chief U.S. economist at Capital
Economics, in emailed comments.
Bottom line, with the dollar continuing to reverse its massive
appreciation from last year and global economic growth rebounding,
the headwinds facing U.S. manufacturers should fade over the coming
months, Ashworth said.
The news pushed the benchmark 10-year Treasury yield higher ,
which favored financial stocks, as higher yields are typically
considered to improve bank profitability, said Quincy Krosby,
market strategist at Prudential Financial.
But in a broader sense, as the stock market is coming out of a
mixed performance in April, what investors want to see right now is
"an indication of some strength building," Krosby said.
The Dow industrials and the S&P 500 closed out April
(http://www.marketwatch.com/story/wall-street-to-eke-out-gains-in-the-cruellest-month-for-tech-amazon-soars-2016-04-29)
with gains of 0.5% and 0.3%, respectively, but the Nasdaq slid 1.9%
due to weaker-than-expected earnings from Apple Inc. (AAPL) and
Intel Corp. (INTC).
This week could be critical, according to Krosby, because a
potential deterioration in the series of data ahead would cause a
"resurrection of the bull-bear debate that dominated the market at
the beginning of the year and that would be a negative for the
market," she said.
Read:Do you dare play 'leapfrog with a unicorn' in this stock
market?
(http://www.marketwatch.com/story/dont-play-leapfrog-with-a-unicorn-as-market-enters-bleak-season-2016-05-02)
On the flip side, should the data along with a flurry of
second-tier earnings reports surprise positively, the S&P 500
and the Dow industrials can push higher to all-time records fueled
by a nascent transition from momentum to value stocks, said Kent
Engelke, chief economic strategist at Capitol Securities Management
Inc.
Other markets: Oil futures were under pressure on Monday, as
traders cashed out of a fast run up in prices in April, pulling
down the stocks of energy companies. The energy sector was down
0.4%, the worst performer on the S&P 500.
Meanwhile, the dollar
(http://www.marketwatch.com/story/japanese-yen-soars-to-fresh-18-month-high-against-the-dollar-2016-05-02)
tapped a fresh 18-month low against the yen overnight. Gains for
the yen crushed the Nikkei 225 index
(http://www.marketwatch.com/story/japanese-stocks-tumble-as-yen-surges-2016-05-02),
which closed down 3.1%. Most Asian markets were shut for holidays.
European stocks
(http://www.marketwatch.com/story/banks-under-pressure-in-europe-amid-holiday-thinned-session-2016-05-02)
were mixed in the absence of London markets, also shut for a
holiday.
Gold prices
(http://www.marketwatch.com/story/gold-pushes-through-1300-as-dollar-suffers-anew-2016-05-02)
continued to rise after closing new highs for the year on Friday
(http://www.marketwatch.com/story/gold-heads-for-15-month-high-as-dollar-gets-crushed-2016-04-29).
Read:In China, the new casino is iron ore
(http://www.marketwatch.com/story/in-china-the-new-casino-is-iron-ore-2016-05-02)
Stocks to watch:Baker Hughes(BHI) said it would use the $3.5
billion breakup fee it will get from Halliburton (HAL) after their
merger was called off
(http://www.marketwatch.com/story/halliburton-baker-hughes-to-scrap-35-billion-merger-2016-05-01)
to buy back $1.5 billion of its stock and pay down $1 billion in
debt. Baker Hughes shares were down 0.6% and Halliburton was up
1.8%.
Apple Inc.(AAPL) dropped 1%, on track for its eighth straight
loss--its longest losing streak in 18 years--after industry tracker
IDC said world-wide shipments of tablets fell another 15%
(http://www.marketwatch.com/story/isad-nobody-wants-to-buy-tablets-anymore-2016-04-29)
during the first quarter of the year as "overall disinterest" for
the product hit record highs.
Read:Wall Street isn't rewarding low-expectation earnings beats
(http://www.marketwatch.com/story/wall-street-not-rewarding-low-expectation-earnings-beats-2016-04-30)
Amazon.com(AMZN) was up 2.5% after billionaire investor Warren
Buffett said at a Berkshire Hathaway shareholder meeting on
Saturday that the company's accomplishments in a short time have
been remarkable.
Read the live-blog recap of the Berkshire Hathaway shareholder
meeting
(http://blogs.marketwatch.com/thetell/2016/04/30/live-blog-warren-buffett-at-berkshire-hathaway-annual-meeting/)
Berkshire Hathaway(BRKA) (BRKA) inched higher by 0.5%
(http://www.marketwatch.com/story/berkshire-hathaway-earning-rise-despite-stumbles-in-insurance-railroads-2016-04-30)
(http://www.marketwatch.com/story/berkshire-hathaway-earning-rise-despite-stumbles-in-insurance-railroads-2016-04-30)
after posting a rise in earnings on Saturday
(http://www.marketwatch.com/story/berkshire-hathaway-earning-rise-despite-stumbles-in-insurance-railroads-2016-04-30)
despite profit falls for railroads, utility and energy
segments.
Time Warner Inc.(TWX) was down 0.4% after analysts at Pacific
Crest Securities downgraded the company to sector weight
(http://www.marketwatch.com/story/time-warner-downgraded-to-sector-weight-as-further-growth-becomes-speculative-2016-05-02)on
uncertain growth outlook.
(END) Dow Jones Newswires
May 02, 2016 11:14 ET (15:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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