Morning lackluster trading was supported by an afternoon rally in tech stocks. Several brokerage houses justified rise in tech stocks with recovering telecom spending and NPD Retail report supported growth in unit sales for PCs and note-book computers. The afternoon rally drove Microsoft, Cisco and Apple to a strong rise for the day. However, the rise in oil price to $60 per barrel before settling at $59.30 up $1.21 put market in serious sell-off mood.
Initial claims of weekly unemployment statistics have not impacted the market. May existing home sales dipped 0.7% from previous month but still up 3.5% from a year ago and recorded annual rate of 7.13 million.
Earnings warnings from Covenant transport, Corinthian Colleges and earnings misses from ATI Technologies, Del Monte Foods, Family Dollar and FedEx put market in the cautious mood in the beginning of the session. Transportation, steel, materials, mining and tech sectors sold-off on a day where three averages took a beating of at least one percent.
In the week ending June 18, the advance figure for seasonally adjusted initial claims was 314,000, a decrease of 20,000 from the previous week's revised figure of 334,000. The 4-week moving average was 333,000, a decrease of 2,500 from the previous week's revised average of 335,500.
The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending June 11, a decrease of 0.1 percentage point from the prior week's unrevised rate of 2.1 percent.
The advance number for seasonally adjusted insured unemployment during the week ending June 11 was 2,600,000, a decrease of 38,000 from the preceding week's revised level of 2,638,000. The 4-week moving average was 2,603,000, an increase of 7,500 from the preceding week's revised average of 2,595,500.
Total existing-home sales—including single family, town-homes, condominiums, and co-ops—slipped 0.7 percent in May to a seasonally adjusted annual rate of 7.13 million from a record of 7.18 million in April. Sales were 3.5 percent above the 6.89 million-unit level in May 2004. Aside from the last two months, the previous record was a sales pace of 7.02 million in June 2004.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.72 percent in May, down from 5.86 percent in April; the rate was 6.27 percent in May 2004.
The national median existing-home price for all housing types was $207,000 in May, up 12.5 percent from May 2004 when the median price was $184,000. The median is a typical market price where half of the homes sold for more and half sold for less.
Existing condominium and cooperative housing sales hit a record in May, rising 2.2 percent to a seasonally adjusted annual rate of 922,000 units from a level of 902,000 in April. Last month’s sales activity was 10.6 percent above the 834,000-unit pace in May 2004. The median condo price was $221,000, up 15.2 percent from a year earlier. Condo sales accounted for 12.9 percent of market activity in May.
Single-family home sales slipped 1.1 percent to a seasonally adjusted annual rate of 6.21 million in May from a record of 6.28 million in April, and were 2.5 percent above the 6.06 million-unit pace in May 2004. The median single-family home price was $204,600 in May, up 12.2 percent from a year ago.
EARNINGS AND CORPORATE NEWS
FedEx posted 4Q earnings rise of $1.46 per share vs. $1.36 a share last year on improved sales but missed estimates of $1.48 a share. Full-year earnings are projected to be between $5.20 and $5.45 a share.
Methode Electronics, electronic automotive components maker, reported 4Q profit rise of 27 cents a share compared with 21 cents a share a year ago on strong sales. For the full year the company predicted earnings in the range of 71 cents per share.
Gerber Scientific, automated manufacturing systems supplier, posted 4Q earnings loss of 21 cents a share compared with earnings of 16 cents per share a year ago.
Del Monte Foods, branded food producer & distributor, reported 4Q earnings decline of 9 cents per share vs. 26 cents per share last year reflecting lower sales, increased inflationary costs and integration expenses.