May 20th 2014 – Retailers Disappoint Dragging The Market Down

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Market View:

Caterpillar and the big retailer numbers fell short causing the market to let off some steam from a three day rally.  I am not sure what the influence will be tomorrow, but y gut says we climb back higher tomorrow.  Janet Yellen is speaking tomorrow and we have the mortgage applications report as well as another slough of eanings reports.  The Dow Jones technically is at a previous low, so odds of a rebound have a strong edge.

Market News:

U.S. stocks fell sharply on Tuesday after a Federal Reserve official said rate hikes might come sooner than expected and Staples and other retailers offered disappointing quarterly results.

Equities fell to session lows after the Fed’s Bank of Philadelphia President Charles Plosser said the central bank’s current taper pace could be too slow if the economy improves as forecast.

The Russell 2000 Index dropped nearly 10 percent from its March record and the Chicago Board Options Exchange Volatility Index, a measure of investor uncertainty known as the VIX, rose 3.1 percent.

Staples projected a drop in sales in the current quarter, with shares of the office supply retailer falling sharply. Urban Outfitters also fell after its quarterly report, along with Dick’s Sporting Goods.

Home Depot reported first-quarter earnings below estimates, with the home improvement chain’s spring selling season off to a slow start after a harsh winter in many parts of the nation. Shares of the company gained, however, as it hiked its full-year earnings forecast and said it intends to buy back as much as $3.75 billion additional shares this year.

Stocks started in the red as Wall Street reacted to quarterly reports from a number of retailers, and disappointing numbers from Caterpillar, which led blue-chip declines after the maker of construction and mining equipment disclosed in a regulatory filing that total retail sales of machines in the three-month rolling period that ended in April were off 13 percent.

European markets closed mostly lower. Vodafone (VOD) shares slumped 5% following quarterly results. Credit Suisse (CS)rose 1% after the bank pleaded guilty to charges related to U.S. tax evasion. The Swiss lender agreed to pay $2.6 billion to settle a long-running probe.

Asian markets ended the day on a positive note, though gains were small. Thailand’s stock market retreated 1.2% and the country’s currency dropped after the Thai army surprised the country by declaring martial law

WEDNESDAY: Mortgage applications, Fed’s Dudley speaks, Fed’s Yellen speaks, oil inventories, Fed’s George speaks, Fed’s Kocherlakota speaks, FOMC minutes, Boeing investor conference; Earnings from Lowe’s, Target, Hormel, PetSmart, Tiffany, American Eagle Outfitters, L Brands, NetApp, Williams-Sonoma

News Sources:  CNBC and CNN Money

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