By Anora Mahmudova and Sara Sjolin, MarketWatch
Empire state index rebounds in May; Industrial production slumps
in April
U.S. stocks were wavering between small gains and losses in
early morning trading Friday, as investors weighed a number of
disappointing economic reports to suss out the timing of the
Federal Reserve's next rate hike.
The main indexes were on track to finish the week with modest
gains, aided by a Thursday rally.
Two sets of manufacturing data released ahead of the market
open, came in below expectations, underlying the recent trend of
weakness in the economy. The preliminary May reading on consumer
sentiment fell to the lowest level in seven month.
John Manley, chief equity strategist at Wells Fargo Advantage
Funds, said the recent trend of weaker data is worrisome.
"I am surprised about extended weakness, but I am not ready to
get out of stocks yet, as there is nothing definitive yet to say
the economy is going into a recession," Manley said.
The S&P 500 (SPX) was about flat at 2,121.22. The Dow Jones
Industrial Average (DJI) was also unchanged at 18,251.10, paring
losses from earlier in the session when the blue-chip index was
down as much as 30 points. The Nasdaq Composite (RIXF) was trading
lower but nearly level at 5,049.55 compared with Thursday's
close.
Craig Erlam, senior market analyst at OANDA, said the moves on
Friday reflected "calmness that has returned to the bond markets"
after a volatile week in fixed-income trading.
"Bond markets now appear to have stabilized, and if anything,
they're paring some of the losses, which is helping overall
sentiment," he said. "The perception that the Fed will be forced to
hold off on its first rate hike a little longer, following those
weak retail-sales figures on Wednesday, is also supporting equity
markets."
U.S. stocks have been weaving in and out of losses this week, as
investors digested the battered bond markets and a string of mixed
data that raised questions about the strength of the U.S. economy.
This has spurred speculation the Fed will wait to raise interest
rates until later this year, rather than in June, which some market
participants had been forecasting.
Former Fed Vice Chairman Donald Kohn said the debate over
rate-hike timing is focused on a move between September and
December
(http://www.marketwatch.com/story/feds-rate-hike-choice-is-september-or-december-kohn-says-2015-05-14).
Data:The Empire State manufacturing index
(http://www.marketwatch.com/story/empire-state-factory-gauge-rebounds-slightly-to-31-in-may-2015-05-15)moved
back into positive territory in May, but only barely and missed
forecasts.
Industrial production
(http://www.marketwatch.com/story/industrial-production-slumps-03-in-april-for-5th-straight-decline-2015-05-15)
fell a seasonally adjusted 0.3% in April, the Federal Reserve said
Friday. Revised data from the U.S. central bank showed that this
was now the fifth straight decline in output.
Meanwhile, consumer sentiment
(http://www.marketwatch.com/story/may-umich-sentiment-falls-to-886-a-seven-month-low-reports-say-2015-05-15)fell
to a preliminary May reading of 88.6, a seven-month low, compared
with a final April level of 95.9, according to reports on the
University of Michigan gauge released Friday.
Movers and shakers: Shares of Netflix Inc. (NFLX) rose 3.6%
after reports the entertainment-streaming service is in talks with
a Chinese media company to enter China's online-video market
(http://www.bloomberg.com/news/articles/2015-05-15/netflix-said-in-talks-to-enter-china-with-jack-ma-backed-wasu).
Avon Products Inc.(AVP) gave up 2.4% after what appeared to be a
bogus takeover offer on Thursday
(http://www.marketwatch.com/story/sec-looking-into-dubious-bid-for-avon-2015-05-15).
El Pollo Loco Holdings Inc.(LOCO) slumped as much as 12% after
the fast-food chain late Thursday reported sales below
forecasts.
King Digital Entertainment PLC(KING) slid 9% after the "Candy
Crush" maker late Thursday reported a drop in revenue
(http://www.marketwatch.com/story/candy-crush-maker-reports-higher-profit-2015-05-14).
On a more upbeat note, Yum! Brands Inc.(YUM) put on 1.5% after
the fast-food company was upgraded to overweight from neutral at
J.P. Morgan.
Shares of Nordstrom Inc.(JWN) climbed 1.2%, shaking off
weaker-than-expected earnings from late Thursday.
For more on today's notable movers read Movers & Shakers
column
(http://www.marketwatch.com/story/nordstrom-symantec-el-pollo-loco-shares-in-focus-friday-2015-05-14).
Other markets: European stock markets rose almost across the
board (http://www.marketwatch.com/storyno-meta-for-guid), building
on gains from Thursday when the European Central Bank's president,
Mario Draghi, underlined the bank's commitment to stimulus
efforts.
In Asia, Hong Kong's Hang Seng Index closed 2% higher
(http://www.marketwatch.com/storyno-meta-for-guid), boosted by talk
that a stock-connect program between Hong Kong and Shenzhen will be
announced as soon as this weekend.
Oil (http://www.marketwatch.com/storyno-meta-for-guid)(CLM5) and
most metals declined, while the ICE dollar index (DXY) moved a leg
higher to trim its weekly loss to 1.1%.
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