Friday, May 1, 2009

Stocks choppy after strong month

Stocks seesawed Friday morning, despite a few better-than-expected economic reports, as investors took a breather after a strong month on Wall Street.

The Dow Jones industrial average (INDU) lost a few points around 90 minutes into the session. The S&P 500 (SPX) index was barely lower. The Nasdaq composite (COMP) fell 3 points, or 0.2%.

Declines had been bigger in the first 30 minutes of the session.

Stocks are coming off a strong April in which bets that the economy is close to stabilizing fueled a big run up. For the month, the Nasdaq gained 12.3%, the S&P 500 gained 9.4% and the Dow Jones gained 7.3%.

Economy: The Institute for Supply Management's manufacturing index rose to 40.1 in April from 36.3 in March versus forecasts for a rise to 38.4. Any reading under 50 indicates the sector is still contracting, but the report was consistent with other recent signs that the pace of the economic slowdown is easing.

Another report showed that consumer sentiment improved in April. The University of Michigan's consumer sentiment index was revised up to 65.1 from a previous reading of 61.9. Economists thought it would hold steady.

A third report showed March factory orders fell 0.9% after rising 0.7% in April. Economists thought orders would fall 0.6%, on average.

Corporate news: Dow component Chevron (CVX, Fortune 500) reported a big drop in first-quarter sales and earnings, that missed expectations, due to a steep drop in energy prices. Shares of the No. 2 oil services firm were little changed.

Fellow Dow component Exxon Mobil (XOM, Fortune 500) reported weaker sales and earnings Thursday.

MasterCard (MA, Fortune 500) reported weaker quarterly earnings that topped estimates on weaker revenue that missed expectations.

Citigroup (C, Fortune 500) is selling its Japanese retail brokerage business to Sumitomo Mitsui Financial Group in a deal worth $7.9 billion.

In other news, the release of the results of the "stress tests" of the nation's largest banks is expected late Thursday, a government source told Reuters. Results were initially expected to be released on Monday.

Autos: Chrysler filed for Chapter 11 bankruptcy protection Thursday after failing to reach a deal with some of its smaller lenders to cut debt. But a deal has been negotiated to combine the company with Italian automaker Fiat, allowing Chrysler to stay in business.

Chrysler is privately owned. Shares of rivals General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500) slipped Friday after rallying Thursday.

Automakers are due to report April sales figures later in the day.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.17% from 3.14% Thursday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.01% from 1.02% Thursday, according to Bloomberg.com. The overnight Libor rate rose to 0.24% from 0.23%. Libor is a bank-to-bank lending rate.
0:00 /2:29Chrysler breakdown

Other markets: In global trading, Asian markets ended higher and European markets rallied in afternoon trading.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for June delivery rose $1.36 to $52.48 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $6.70 to $884.50 an ounce.

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