Week In Review: Stocks End Month Higher; Week Lower

Stocks End Month Higher; Week Lower

The Dow Jones Industrial Average, the benchmark S&P 500, small-cap Russell 2000, and Nasdaq composite all fell last week but rallied for the month. The latest reading on U.S. Q1 GDP fell 0.7%, beating the government’s estimate for a decline of 0.8%. Economists now believe that Q2 GDP will grow around 2% which means the U.S. economy is poised for its worst first-half performance since 2011…WITH RATES AT ZERO. The Fed has told us that they remain data-dependent and that we should continue to interpret incoming data for signs of what they will do next. At this point, the “data” clearly suggests that a rate hike is off the table until the “data” improves markedly. In fact, I would argue that the Fed will likely CUT rates/ announce QE 4, because that is what the “data” is suggesting right now. The option to raise rates is off the table for now, because if the economy can’t grow when rates are at zero – what will happen if they raise rates? Looking at the market, it is disconcerting to see the transports continue to act so weak which bodes poorly for both Main St & Wall St. We’ll see how this plays out but this is definitely front and center on our radar and not a “bullish” sign. The “good” news is that the major averages are all trading a few percentage points below their 2015 and/or record highs. For now, that is bullish as all of the pullbacks remain shallow in both size (small % decline) and scope (short in duration). 

Monday-Wednesday’s Action: Economic & Earnings Data Is Not Impressive

Stocks were closed on Monday in observance of the Memorial Day Holiday. Stocks opened lower on Tuesday as investors digested the latest round of tepid economic data and the USD resumed its very strong uptrend. Remember the Fed remains “data-dependent” and so far the data remains lackluster at best which removes pressure for the Fed to raise rates anytime soon. On Tuesday, durable goods fell -0.5% in April which barely beat estimates for a decline of -0.6% but was still in negative territory which is not ideal. The Dallas Fed Manufacturing survey plunged to -20.8, missing estimates for -10.0. Markit’s Flash PMI (Purchasing Managers Index) for the services sector slid for a third straight month in May to 56.4, missing estimates for 56.5. The Richmond Fed Manufacturing Index remained soft, at 1, matching estimates for 1. The Conference Board Consumer Confidence report rose to 95.4 in May, beating estimates for 95.1. We saw some somewhat encouraging news from the housing market. New home sales rose +6.8% in April to a seasonally adjusted annual rate of 517k, beating estimates for 510k. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 5% in March on a year-over-year basis, beating estimates for a +4.7% gain. Stepping back, the bigger problem for the “data-dependent” Fed continues to be the economic “data” continues to be lackluster at best with the Fed keeping rates at 0%. It raises the question, how much worse will it be if the Fed begins to tighten ? Stocks rallied sharply on Wednesday after rumors spread that Greek officials and Eurogroup members have started crafting a staff-level agreement to secure funds to avoid a Grexit (Greece leaving the Eurozone). The rumor was refuted after Bloomberg cited a Eurogroup official as saying the two sides have yet to begin working on a joint statement. Economic data was limited to the weekly MBA Mortgage Index, which fell 1.6% to follow last week’s 1.5% decline.

Thursday-Friday’s Action: Stocks Pullback From 2015 Highs

Stocks slid on Thursday after after the Transports slid to a fresh low for the year and the Greek drama continued. The head of the IMF, Christine Lagarde, told a German newspaper that a Greek exit from the euro zone was possible but, if that occurred, it would probably not destroy the euro currency. She said such a step would “not be a walk in the park” but would “probably not” mean the end of the euro. In other overseas news, Chinese stocks plunged 6.5% on Thursday after tighter margin requirements were cited for the large decline. Even with the decline, the Shanghai Composite is still up a very impressive 40% in 2015. In the U.S., weekly jobless claims came in at 282k, missing estimates for 270k. Pending home sales rose 3.4% in April, the highest in 9 years, and beat estimates for 0.8%. Before Friday’s open the government said U.S. GDP fell -0.7%, beating the government’s estimate for a -0.8% decline but missing economists’ estimates for a decline of 0.1%. The Chicago PMI unexpectedly fell to 46.2 in May, missing estimates for 53.1. Separately, consumer sentiment came in at 90.7 for May, the lowest since November, but beat estimates for 90.3.

Market Outlook: The Central Bank Put Is Alive And Well

Remember, in bull markets surprises happen to the upside. This has been our primary thesis since the end of 2012. We would be remiss not to note that this very strong bull market is aging (celebrated its 6th anniversary in March 2015) and the last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007). To be clear, the central bank put is very strong and until material damage occurs, the stock market deserves the longer-term bullish benefit of the doubt. As always, keep your losses small and never argue with the tape.

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Reuters Quote: Investors find big upside in small U.S. death services companies

Fri May 29, 2015 11:20am EDT
Companies that provide end-of-life services stand to benefit from what boils down to a macabre version of high demand as the U.S. baby boom generation approaches their seventies.
Roughly 2.6 million people died in the United States in 2014, up from 2.47 million in 2010, according to the Center for Disease Control, and demographic trends indicate that number will continue to rise.
Service Corp International, which operates funeral homes and cemeteries, has been a prime beneficiary of the aging population. Its shares have risen 27.7 percent in 2015 through Thursday’s close, on track for its sixth straight annual gain of more than 20 percent.
Among smaller peers with market caps below $1 billion, StoneMor Partners was up 16.4 percent year-to-date, easily outpacing the S&P 500’s 3 percent rise. Carriage Services was up 19.4 percent and on track for its seventh straight annual increase.
“The demographic trend will probably last a couple of decades,” said Charles Sizemore, chief investment officer of Sizemore Capital Management in Dallas, who owns StoneMor shares. “It’s morbid, but the time will come for every boomer, and the result of that is a very good backdrop for these companies.”
The biggest threat is not life-extending advances in medical technology, but instead a growing trend toward cremation, which is cheaper, Sizemore said.
According to the National Funeral Directors Association, the median U.S. funeral cost $7,045 in 2012, the most recent year for which data is available. A cremation can cost less than half of that.
The NFDA projects 48.2 percent of 2015 services will be cremations while 45.8 percent will be burials. By 2030, though, it estimates that 70.6 percent of services will be cremations while fewer than 25 percent will be burials.
“An urn is certainly cheaper than a burial plot,” Sizemore said, “but even if a larger proportion opts for cremation, there will be business for everyone, given the sheer number of deaths coming down the pipeline.”
The popularity of cremations could already be having an impact on other death-related companies. Matthews International Corp, which makes memorialization products like tombstones, is up 3.4 percent this year, underperforming Carriage and StoneMor. Hillenbrand Inc, whose Batesville Casket Co subsidiary makes coffins, is down 9.2 percent.
Also of concern for investors is the size of the companies. Not only do most have small market caps, but the group also tends to be thinly traded, making it difficult to buy and sell quickly.
While Service Corp’s 50-day average volume exceeds 1.1 million shares, the others trade well below that. Typically, fewer than 100,000 Matthews shares change hands daily.
“I understand the aging demographic thesis for this group, but they’re not nearly as liquid as I’d like,” said Adam Sarhan, chief executive officer of Sarhan Capital in New York. Sarhan closed out a position in Service Corp in March, saying it hit his target to take profits.
“These all look like strong stocks, and I’d expect all of them to see strong revenue growth,” he said, “but it is really tough to move serious money in and out when they trade this little.”
Source: http://www.reuters.com/article/2015/05/29/us-usa-stocks-funerals-idUSKBN0OE1Y720150529

Reuters Quote: US STOCKS-Wall St futures unchanged, set for lower open after GDP data

* Q1 GDP data shows economy contracted
* Corporate earnings down 8.7 pct
* Altera up on report of Intel takeover interest
* Futures down: Dow 47 pts, S&P 5.5 pts, Nasdaq 14.25 pts (Adds quote, updates prices)
By Sweta Singh
May 29 (Reuters) – U.S. stock futures were largely unchanged, keeping the market on course to open lower on Friday, after data showed that the economy contracted in the first quarter.
The U.S. government slashed its gross domestic product estimate to show it shrinking at a 0.7 percent annual rate instead of the 0.2 percent growth pace it estimated last month.
Economists had expected GDP would be revised down to show it contracting at a 0.8 percent pace.
“Monetary policy from the Fed is forward looking and GDP by definition is in the rear view mirror and the important thing now is that it wasn’t a big miss,” said Adam Sarhan, chief executive of Sarhan Capital.
Investors keep a keen eye on economic data for clues to narrow down the timing of an increase in interest rates by the Federal Reserve.
“So far, the Fed’s been data dependent and the data including today’s GDP numbers on average continues to be weaker than expected, which removes an imminent threat from the Fed to raise rates,” Sarhan said.
With growth estimates so far for the second quarter around 2 percent, the economy appears poised for its worst first half performance since 2011.
The GDP report also showed that corporate profits declined 8.7 percent – the largest drop in a year and the second straight quarterly fall – as the dollar weighed on multinational corporations and oil prices hurt domestic firms.
Greece’s ability to strike a deal with its euro zone partners by Sunday also weighed on global markets.
A euro zone official said Greece will not be able to get the money still available under its current bailout plan if it does not agree to the outline of a reforms-for-cash deal with creditors by the end of next week.
S&P 500 e-mini futures were down 5.5 points and their fair value – a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract – indicated a lower open.
Dow Jones industrial average e-mini futures fell 47 points and Nasdaq 100 e-mini futures lost 14.25 points.
Altera rose 5.7 percent to $49.67 in premarket trading after the New York Post reported that Intel was close to buying the chipmaker for about $15 billion. Intel was up 0.85 percent to $34.30.
Splunk fell 3.19 percent to $68.80 after the data analytics software maker posted a bigger quarterly loss, hurt by higher expenses.
Heron Therapeutics rose 33.60 percent to $16.50 after the company’s nausea drug met the main goal in a late-stage trial.
Source: http://www.reuters.com/article/2015/05/29/markets-stocks-usa-idUSL3N0YK47M20150529

The Fed's Biggest Problem

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The Federal Reserve is in a tough spot and faced with a big conundrum: the economy is not responding well (GDP most likely contracted last quarter) to their historic easy money policies. Since 2008, the Fed has held rates at zero and has pumped more money into the system (QE1, QE2, & QE 3), than any other Central Bank in history! Even with all that, GDP remains anemic at best and was most likely negative last quarter…That, in a nutshell, is their biggest problem.
The good news is that the stock market is responding exceptionally well to their easy money policies and the U.S. economy is the largest its ever been in history, approaching $18 trillion (although barely growing).
Over the last few years, other central banks have jumped on to the Easy Money bandwagon and we saw the QE trade “evolve” (to borrow a term coined by Mohamed El-Arian when QE 3 ended in October 2014).  Now every major central bank in the world has adopted some sort of “easy money ” stance and the U.S. Fed still has rates pegged at zero. The Fed remains “Data-Dependent” and has told us they don’t plan on raising rates until the data improves. So far, the data is not improving.
The problem Dr. Yellen and company face now is that the economy is NOT growing even with rates at zero. Imagine what will happen if they raise rates? Will we fall into another recession? Will corporate earnings get crushed? Will deflation surge? etc..etc. The latest round of economic data continues to disappoint which suggests to us that the Fed is not in a rush to raise rates anytime soon. Eventually, that will change but until the “data” improves, we have to expect this sideways to sloppy action to continue on Wall Street.
What concerns us even more is the outright awful action we are seeing in the transports since November 2014 which should serve as a proxy for the economy. Remember, the transports benefit from “stuff” moving throughout he economy and the fact that they are getting trashed bodes poorly for both Main St and Wall St.
Another disconcerting event that emerges on our radar is the sloppy action in other capital markets, mainly global Currencies & Commodities. It is not normal to see major global currency and commodity markets trading all over the map, and some trading like penny stocks. Over the past year alone, crude oil plunged 60% in 10 months and then surged nearly 50% in 2 months. That is not “normal” action for a major global commodity like crude oil and if we polled a large group of investors and told them an asset fell 60% in a few months then surged 50% almost all of them would probably say it is a penny stock, not a major global commodity.
All this sloppy action in the macro arena typically bodes poorly for stocks. But so far, the equity market continues to shrug off any and all bearish news and instead continues to focus on the easy money from the Fed and other central banks. Eventually, the music will end (the market will stop reacting so well to the easy money sloshing around the globe) and this aging bull market will end. Until then, by definition, we are still in a very strong bull market and pullbacks should be bought until more damage emerges.
For the past few years, all pullbacks have been shallow in both size (small % decline) and scope (short in duration) which illustrates how strong this bull market is. Additionally, I cannot recall at time when a bull market in equities ended with rates at zero. We would be remiss not to note that the benchmark S&P 500 has not seen a -10% correction since June 2012 which is a very long time. Which means we are getting closer to a 10% correction, not further away. We remain bullish but want to be prepared when (not if) the market pulls back. Until then, we expect the market to continue to move higher from here. If you want specific buy and sell signals, consider joining FindLeadingStocks.com

CNBC Quote: Dow briefly adds 100 points as stocks bounce; Greece eyed

U.S. stocks traded higher on Wednesday, recovering some of Tuesday’s sharp decline, as investors eyed Greece headlines amid continued rise in the dollar and bond yields.
The Dow Jones industrial average briefly gained more than 100 points soon after the open. The blue chip index fell as much as 242 points on Tuesday before closing 190 points lower.
“Improved sentiment in Europe is providing a boost to U.S. equities,” said John Lonski, chief economist at Moody’s. The German DAX gained more than 1 percent, while Greece’s ATHEX Composite traded 3.5 percent higher.
“That would lessen the perceived risk surrounding the Greek’s ability to make good on its debt payment obligations,” Lonski said.
Greek Prime Minister Tsipras said on Wednesday the negotiations are on the final stretch towards a positive deal.
The dollar reversed, with the euro gaining to $1.09. The yen remained near 8-year highs.
Marc Chandler, foreign exchange strategist at Brown Brothers Harriman, said the dollar moved on Greek headlines but he is still suspicious that much progress was made.
Treasury yields resumed their rise, with the 2-year near 0.65 percent and the 10-year at 2.15 percent.
“I think the market is going to catch its breath after yesterday’s tumble. The focus remains on the dollar and the yield curve,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
No major data is expected Wednesday. Weekly mortgage applications dropped 1.6 percent as higher rates put a pause on refinancing.
Investors will continue to watch the Dow transports, which attempted to trade about half a percent higher. The index extended its recent selloff on Tuesday, with its 50-day moving average falling below its 200-day moving average.
‘There’s “nothing that suggests a correction in the transports is over and eventually the broader market will get hit,” Cardillo said. ” I think June is going to be a bit different from May—a tough month for stocks.”
The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, traded above 14. The index jumped 16.2 percent on Tuesday for its best daily move since January 28.
“The VIX was near year-to-date lows. When that happens, it becomes very skittish and very sensitive to any negative move,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
Stocks closed down more than 1 percent on Tuesday as investors weighed a strong dollar and mixed economic data that indicated the Fed could tighten sooner rather than later.
“This is the least-trusted bull market. At the first sign of weakness you see lots of people exit,” said Adam Sarhan, CEO of Sarhan Capital.
“If we open higher and close lower, that may be a subtle indication that the market isn’t ready to go higher,” he said.
U.S. Treasury Secretary Jack Lew attends the G7 meeting of finance ministers in Dresden on Thursday and Friday.
Ahead of the meeting, Lew told students at the London School of Economics that European negotiators must not miscalculate as they try to negotiate a debt deal with Greece’s government. uncertainty over the actual cost of a Greek exit from the euro zone should
The Dow Jones Industrial Average traded up 110 points, or 0.60 percent, at 18,152, with Cisco leading all blue chips higher.
The S&P 500 traded up 13 points, or 0.63 percent, at 2,117, with information technology leading all 10 sectors higher.
The Nasdaq traded up 38 points, or 0.76 percent, at 5,071.
About two stocks advanced for every decliners on the New York Stock Exchange, with an exchange volume of 98 million and a composite volume of 359 million in morning trade.
Crude oil futures fell 81 cents to $57.55 a barrel on the New York Mercantile Exchange. Gold futures fell $1.20 to $1,185.70 an ounce as of 9:57 a.m.
Earnings out before the open on Wednesday included Michael Kors, Costco, Tiffany, Toll Brothers, and Movado.
Tiffany earned 81 cents per share for its latest quarter, 11 cents above estimates, and revenue was also well above forecasts despite the negative effects of a strong dollar. The results follow a downbeat forecast given by Tiffany earlier this year.
Michael Kors fell one cent shy of estimates with quarterly profit of 90 cents per share, with revenue essentially in line. The company, however, reported its slowest sales growth in 3-1/2 years, and its full-year forecast, however, is below Street estimates.
Toll Brothers earned 37 cents per share for its latest quarter, two cents above estimates. The luxury home builder did see revenue come in below estimates as the number of homes sold fell two percent.
DSW reported quarterly profit of 53 cents per share, six cents above estimates, and revenue also was above analyst forecasts. The company’s results were led by a jump in athletic footwear sales, though it did see growth in all its major categories.
European stock markets traded higher Wednesday despite concerns over Greece’s deteriorating financial situation.
U.S. Federal Reserve Vice Chairman Stanley Fischer said Tuesday that markets should not be surprised by the timing or pace of rate hikes.
CNBC’s Patti Domm and Peter Schacknow contributed to this report.

Source: http://www.cnbc.com/id/102710035

Reuters Quote: US STOCKS-Wall St set to open lower as dollar rises

* Business spending rises in April
* Dollar hits one-month high
* Time Warner Cable up on Charter deal
* Futures down: Dow 41 pts, S&P 7 pts, Nasdaq 14.25 pts (Adds details, comments, updates prices)
By Tanya Agrawal
May 26 (Reuters) – Wall Street was set to open lower on Tuesday after the dollar jumped to a one-month high on data showing that U.S. business investment spending plans increased solidly for a second straight month in April.
Federal Reserve Chair Janet Yellen said on Friday that the central bank could raise interest rates this year if the economy keeps improving as expected.
The dollar was hovering at an eight-year high against the yen and a one-month peak against a basket of other big currencies.
“It isn’t normal to see such large moves in currencies,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
“Such moves heightens volatility in the market.”
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.0 percent last month, a hopeful sign for manufacturing activity after a recent long spell of weakness.
Investors will be keeping a keen eye on data through the day for signs that the economy is recovering after hitting a soft patch in the first quarter.
S&P 500 e-mini futures were down 6.75 points and their fair value – a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract – indicated a lower open.
Dow Jones industrial average e-mini futures were down 41 points and Nasdaq 100 e-mini futures were off 14.25 points.
The Conference Board releases its index of consumer attitudes, which is expected to show consumer spending fell slightly in May from April. The data is due at 10:00 a.m. ET.
New home sales data at 10:00 a.m. ET (1400 GMT) is expected to show sales increased to an adjusted annual rate of 510,000 units in April from 481,000 units in March.
The S&P/Case Shiller composite index of home prices in 20 metropolitan areas is expected at 9:45 a.m. ET.
Charter Communications’ shares were up 0.6 percent to $176.36 in premarket trading after it agreed to buy Time Warner Cable for $55.8 billion. Time Warner Cable rose 5.4 percent to $180.39, well below Charter’s cash and stock offer of $195.71.
Ctrip.com gained 4.3 percent to $88.27 after Priceline said it will invest an additional $250 million in the Chinese online travel company. Priceline was down 0.8 percent at $1,198.35.
LivePerson shares were up 13.7 percent at $10.16 after an Israeli website reported software provider Nice Systems was in talks to acquire the chat software firm. Nice was down 2.7 percent at $63.30.
Source: http://www.reuters.com/article/2015/05/26/markets-stocks-usa-idUSL3N0YH41E20150526

Week In Review: Stocks Edge Higher Ahead of Holiday Weekend

Stocks Edge Higher Ahead of Long Weekend

Stocks edged higher last week as investors digested the latest round of mixed economic and earnings data. In the short term, the market looks a little extended and due for a little pullback to digest its recent gain. The big take-away is that the stock market remains strong as we have yet to see any conclusive “data” that suggests the Fed should raise rates anytime soon. In fact, most of the data continues to be lackluster at best which means the “data-dependent” Fed will likely not raise rates anytime soon (which, for now, is bullish for stocks). Looking at earnings, so far,approximately 481 companies in the S&P 500 (96%) have reported Q1 results and 63% have had a positive EPS surprise and 33% had a negative EPS surprise with the reminder meeting estimates. The fact that the market has edged higher since earnings season began bodes well for this aging bull market and suggests higher prices will likely follow, for now. History shows us that some of the market’s strongest performers occur from big gaps up on earnings and some of the weakest stocks gap down after reporting numbers.The big winners (so far) from earnings season include: Amazon.com ($AMZN), Netflix ($NFLX), Hasbro ($HAS), Domino’s Pizza ($DPZ), Skechers ($SKX), Dunkin (Donuts) Brands Group ($DNKN), Microsoft Corp ($MSFT), O’Reilly Automotive ($ORLY), and YUM Brands ($YUM), Skywest ($SKYW), Web.com ($WWWW), Equinix ($EQIX), Styngenta ($SYT), Nutri System ($NTRI), Brink’s Co ($BCO), Teradyne Inc ($TER), Skyworks Solutions ($SWKS), GoPro ($GPRO), Estee Lauder ($EL), Abiomed Inc ($ABMD), Golar LNG ($GLNR), Energizer Holdings ($ENR), RetailMeNot, Inc ($SALE), Herbalife ($HLF), BlueBird Bio ($BLUE), HubSpot Inc ($HUBS), Alibaba Group ($BABA), Qorvo Inc ($QRVO), Visteon Copr ($VC), Norwegian Cruise Line Holdings ($NCLH)
On the downside: Whole Foods Market ($WFM), Keurig Green Mountain ($GMCR), Kate Spade ($KATE), Lannett Co ($LCI), Nu Skin ($NUS), Terra Nitrogen ($TNH), Tumi Holdings ($TUMI), Noodles & Company ($NDLS), Qualys ($QLYS), Groupon Inc ($GRPN), News Corporation ($NWSA), Vitamin Shoppe Inc, ($VSI), Fossil Inc ($FOSL), Frontier Communication ($FTR), TriNet Group ($TNET), Zulily Inc ($ZU), Weight Watchers ($WTW), Walter Energy Inc. ($WLT), Skullcandy ($SKUL) Twitter ($TWTR), Yelp ($YELP), LinkedIn ($LNKD), Constant Contact (CTCT), Accuray ($ARAY), Cooper Tire & Rubber ($CTB), Abaxis ($ABAX), Texas Instruments ($TXN), Buffalo Wild Wings ($BWLD), Baidu Inc. ($BIDU), Stratasys ($SSYS), Harman ($HAR), Nokia ($NOK), Travelers ($TRV), 3M ($MMM), Chipotle ($CMG), Pulte Group ($PHM), Biogen Inc ($BIIB), Generac Holdings ($GNRC), First Solar ($FSLR), and American Express ($AXP), just to name a few. 

Monday-Wednesday’s Action: Economy Data Is Not Impressive

Stocks rallied on Monday helping the Dow Jones Industrial Average and the benchmark S&P 500 hit new record highs. Stocks rallied after the National Association of Home Builders’ survey missed estimates and showed builder confidence fell two points in May. Separately, European stock markets and the Euro were under slight pressure after rumor spread that Greece was on the verge of bankruptcy. Greek bond yields soared, with the 10-year jumping a whopping 7%, after a leaked internal memo from the International Monetary Fund showed the country had little chance of making the June 5 payment. Spanish and Italian bond yields also jumped more than 7% on related fears. 

Stocks ended mixed on Tuesday as the U.S. dollar soared and a slew of commodities fell. Overseas, the euro tanked (greenback surged) after Benoit Coeure, an executive member of the European Central Bank, said the central bank plans to “front load” its QE (bond buying) program in the early part of the summer. This basically means they are pumping even more money into the system to help boost asset prices and, in turn, send their equity markets higher and the euro lower.  In the U.S., housing starts jumped +20.2% in April to 1.135 million, beating estimates for 1.019M. 
Stocks were quiet on Wednesday as the greenback edged higher as a slew of currencies and commodities fell. The Dow transports fell 1.5% and remained under serious pressure. A slew of airline stocks were hammered and Southwest (SAVE) plunged over 8.5% at one point in the day. At 2pm EST, the Federal Reserve released the minutes of their latest Fed meeting which reiterated their recent data-dependent stance. Chicago Fed President Charles Evans said in Munich that a rate hike is not likely to be appropriate until early 2016.

Thursday-Friday’s Action: Stocks Flirt With New Highs

On Thursday, stocks were quiet as investors digested the latest round of mixed economic data. Existing home sales fell 3.3% in April, missing estimates for a gain of 1% to 5.24 million units. A separate report showed that manufacturing PMI came in at 53.8 in May, missing estimates for a gain of 54.5. The May U.S. Philadelphia Fed Index rose to 6.7, missing estimates for 8.0. The Conference Board said its leading indicator index, which forecasts future economic activity, rose by 0.7%, beating estimates for a 0.3% gain.  Weekly jobless claims fell to  274k, slightly above the 271k forecast. The 4-week moving average remains the lowest since April 2000. Stocks drifted lower on Friday as the transports continue to drag stocks lower. The consumer price index (CPI) rose by 0.1%, matching estimates. Core prices (which strip out food and energy) rose by 0.3%, the fastest gain since January 2013.

Market Outlook: The Central Bank Put Is Alive And Well

Remember, in bull markets surprises happen to the upside. This has been our primary thesis since the end of 2012. We would be remiss not to note that this very strong bull market is aging (celebrated its 6th anniversary in March 2015) and the last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007). To be clear, the central bank put is very strong and until material damage occurs, the stock market deserves the longer-term bullish benefit of the doubt. As always, keep your losses small and never argue with the tape.

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CNBC Quote: Stocks mostly lower; Dow transports off 1%

U.S. stocks traded mostly lower on Friday as investors digested a strong core inflation figure ahead of Fed Chair Janet Yellen’s afternoon speech.
Art Cashin, director of floor operations at UBS, said the roughly 1 percent decline in the Dow transports was weighing on equities. Pressured primarily by airlines, the index is on track for its worst week since March 27.
The transports are down 6.8 percent in the last six months, versus the Dow Jones industrial average’s 2.3 percent gain.
The Dow traded about 50 points lower. The S&P 500 and the Nasdaq attempted slight gains, with the latter trying to hold above its closing high of 5,092.09.
Stock index futures turned mildly negative on the inflation report and the 2-year Treasury yield topped 0.61 percent, but longer-end bond yields initially held steady before creeping higher. The 10-year yield traded near 2.22 percent.
The dollar turned positive, gaining nearly 1 percent with the euro lower at $1.10.
The cash bond market will close early today at 2 p.m. ET ahead of the long weekend.
“Investors are starting to price in … a rate hike some time in 2015,” said Andrew W. Ferraro, wealth advisor at Strategic Wealth Partners. The consumer price index came in “a little higher. That may suggest a slightly earlier rate hike.”
Fed fund futures priced in a 45 percent chance of rate hike in September, up from 40 percent earlier and 35 percent last week.
Read MoreDivergence creates spooky undercurrent for stocks
The Labor Department said on Friday its Consumer Price Index (CPI) rose 0.1 percent last month, with the core figure discounting food and energy costs up 0.3 percent, for the largest gain since January 2013.
Economists polled by Reuters had forecast the CPI edging up 0.1 percent from March and dipping 0.1 percent from a year ago.
“I think it’s a decent sign for the economy,” said Todd Hedtke, vice president for investment management at Allianz Investment Management. “I don’t think it’s a good sign for capital markets. It’s been a ‘goldilocks’ market for so long. You’re going to see some pressure. But the bottom line, the inflation inching north is a positive sign. We need to see a little more of that spending.”
Read MorePay up now, but gas is going to get much cheaper
Much of the recent economic data indicated moderate growth, but not enough to warrant an interest rate hike soon.
Despite better jobs data, consumer spending and price increases were mostly muted. The Federal Reserve is watching for enough strength in employment and inflation to support a rate hike.
“I think it wasn’t an outstanding number,” TD Ameritrade chief strategist JJ Kinahan said of the CPI read. “But when you’re at all-time highs and no blow-away numbers it’s an excuse to sell.”

30-day DJIA performance

Trading volumes are expected to be lighter than usual ahead of the three-day Memorial Day weekend, but investors will focus on Yellen’s 1 p.m. ET speech on the economy to the Greater Providence Chamber of Commerce.
“A low volume market can be volatile,” said Art Hogan, chief market strategist at Wunderlich Securities. We may get “an outsized move on anything that is perceived to be different (in Yellen’s speech).”

The Dow Jones Industrial Average traded down 22 points, or 0.13 percent, at 18,261, with Boeing leading laggards and American Expressand Apple the greatest advancers.
The S&P 500 traded down 0.41 points, or 0.02 percent, at 2,130, with telecommunications leading seven sectors lower and information technology the greatest advancer.
The Nasdaq traded up 11 points, or 0.22 percent, at 5,101.
About four stocks declined for every three advancers on the New York Stock Exchange, with an exchange volume of 160 million and a composite volume of 731 million in late morning trade.
Crude oil futures for July fell 73 cents to $60.00 a barrel on the New York Mercantile Exchange. Gold futures gained $2.20 to $1,206.30 an ounce as of 11:05 a.m.
Earnings out on Friday included Campbell Soup, Deere, Foot Lockerbefore market open.
Lions Gate Entertainment came in 7 cents above estimates with adjusted quarterly profit of 39 cents per share, but revenue fell considerably below analyst forecasts.
BlackBerry will buy back about 2.6 percent of its outstanding shares, to negate potential negative effects of a proposed employee stock purchase plan.
Hewlett-Packard reported adjusted quarterly profit if 87 cents per share, 2 cents above estimates, though revenue was slightly shy of forecasts. The company also issued weaker-than-expected current quarter guidance. Investors are taking note of a positive development—lower-than-expected expenses for the separation of its personal computer and printer businesses into a separate company.
Deere & Co. earned $2.03 per share for its latest quarter, beating estimates of $1.55 despite a slight revenue shortfall. Deere noted a weak global agricultural sector, but said good execution aided its bottom line.
Foot Locker beat estimates by 6 cents with earnings of $1.29 per share. Revenue and same-store sales were above analyst forecasts, and the company said the quarter was the most profitable in its history.
Campbell Soup earned an adjusted 62 cents per share for its latest quarter, 10 cents above estimates, though revenue fell short due to currency effects. Campbell said its full-year sales would fall towards the lower end of its projected range, but earnings would be at the more favorable end.
Read MoreEarly movers: DE, FL, CPB, HPQ, GPS, ROST & more
European equities were mixed on Friday as investors focused on a central bank meeting in Portugal and Yellen’s speech.
Mario Draghi, president of the European Central Bank (ECB), spoke at the event in Sintra, Portugal earlier Friday. He said that the economic outlook for the euro zone is looking “brighter today than it has done for seven long years.”
The S&P 500 ended mildly higher on Thursday above its previous record close of 2,129.20 to post its 10th closing high for the year.
“Investors are going into this weekend knowing there isn’t any catalyst to force the Fed to move anytime soon and that means we’re all data-dependent,” said Adam Sarhan, CEO of Sarhan Capital.
Durable goods orders and another read on first-quarter GDP come out next week.
Reuters and CNBC’s Patti Domm and Peter Schacknow contributed to this report.
Source: http://www.cnbc.com/id/102701374

Reuters Quote: US STOCKS-Wall St opens mixed ahead of homebuilder

* Endo down after agreeing to buy Par Pharmaceutical
* Altera up on report of possible deal with Intel
* Ann rises after Ascena Retail takeover offer
* S&P closed at record-high on Friday
* Indexes: Dow up 0.05 pct, S&P down 0.02 pct, Nasdaq down 0.08 pct (Updates to open)
By Sweta Singh
May 18 (Reuters) – U.S. stocks were mixed on Monday after a stream of weak economic data over the last week muddied the outlook for U.S. interest rates, making investors wary of taking big positions.
The market will get another clue on the state of the economy at 10 a.m. ET (1400 GMT) when the National Association of Homebuilders releases its monthly homebuilder confidence index.
If the index does not rise, as expected, stocks could rally, said Adam Sarhan, chief executive of Sarhan Capital in New York.
The U.S. economy is struggling to rebound strongly enough for the Federal Reserve to raise interest rates before September, analysts have said.
Data released on Friday showed that industrial output slipped and consumer sentiment fell. The S&P gained 0.08 percent to close at a record high of 2,122.73, modestly exceeding its previous peak on April 24.
The Federal Reserve could look at a rate hike in June if the economy is strong enough, Chicago Fed President Charles Evans said on Monday, although he argued for rates to start rising in early 2016.
Six of the 10 major S&P 500 sectors were down, with the materials index weighing the most with a 0.46 percent fall. LyondellBasell was down 1.18 percent, making it the biggest drag on the index.
At 9:40 a.m. ET (1340 GMT) the Dow Jones industrial average was up 8.98 points, or 0.05 percent, at 18,281.54, the S&P 500 was down 0.36 points, or 0.02 percent, at 2,122.37 and the Nasdaq Composite was down 4.09 points, or 0.08 percent, at 5,044.20.
Endo International’s shares fell 3.3 percent to $82.77 after the generic drugmaker said it would buy privately held Par Pharmaceutical from TPG Capital in a $8.05 billion deal.
Altera rose 5.8 percent to $46.99 after the New York Post reported that the company had resumed talks with Intel on a possible deal. Intel was little changed.
Ann Inc gained 21.5 percent to $47.05 after the company agreed to be bought by Ascena Retail for $2.15 billion in cash and stock.
Alibaba fell 1.4 percent to $87.17 after a group of luxury goods makers sued the company on Friday, contending that the Chinese e-commerce giant knowingly made it possible for counterfeiters to sell their products throughout the world.
Declining issues outnumbered advancers on the NYSE by 1,627 to 1,023, for a 1.59-to-1 ratio on the downside. On the Nasdaq, 1,206 issues fell and 1,063 advanced for a 1.13-to-1 ratio favoring decliners.
The S&P 500 index posted 12 new 52-week highs and two new lows; the NasdaqComposite recorded 29 new highs and 17 new lows.

Source: US STOCKS-Wall St opens mixed ahead of homebuilder