First quarter GDP revised upwards; durable goods orders fell less than expected in April
Blackberry wins royalty case against Qualcomm
Indexes little changed as traders ponder starting holiday weekend early
The gains may have been small but they were enough for the S&P 500 and Nasdaq Composite to ascend to new highs on Friday.
Ahead of extended Memorial Day weekend, the Dow Jones Average declined to join the party, shedding three points at 21,080.
The S&P hardened slightly less than a full point to 2,416, while the Nasdaq Composite tiptoed five points higher to 6,210.
All three benchmarks finished higher on the week: the Dow improved 1.3%; the S&P 500 1.4% and the Nasdaq climbed 2.1%.
In Canada, the S&P/TSX Composite index rose six points to 15,417, but tech flagship Blackberry Ltd (TSE:BB, NASDAQ:BBRY) drifted 11 cents lower on Nasdaq to US$11.11 and 17 cents lower to C$14.95 in Toronto, despite winning a dispute over royalty payments with Qualcomm Inc (NASDAQ:QCOM).
Blackberry is in line to receive US$940mln in rebates from Qualcomm by the end of the month.
Qualcomm shares fell 0.6% to US$57.52.
Shares in Blackberry have quietly risen 61% year-to-date as the former smartphone pioneer makes the transition to a software house.
Lunchtime: Tumbleweed connection
Investors appeared to have decided on being undecided in the run-up to the holiday weekend.
The Dow Jones average, Nasdaq Composite and S&P 500 were all marginally in the red but in the time it took to read that sentence they could have moved back into positive territory, such has been the gentle see-saw action.
Durable goods data was similarly mixed; orders for durable goods fell 0.7% last month but this was not as bad as the 1% pundits had predicted.
While the main benchmarks seemed disinclined to go in for volatile movements there were at least some big movements among stocks, none more so than the thinly traded NII Holdings Inc (NASDAQ:NIHD), which saw its share price rise by two-thirds.
The reason for the rise is the old stock market report chestnut of “more buyers than sellers”, with some big buy orders coming in following a shareholder revolt this week over executive remuneration at the wireless communications company.
Chinese car rental company eHi Car Services Ltd (NYSE:EHIC) found the market easy to please; all it did was announce it would publish first quarter results on 5 June and the shares rose 8%.
Open: Deckers puts best foot forward
US blue-chips have opened with small losses ahead of the long weekend, with sentiment lifted by the revision of first quarter gross domestic product.
“Upward revisions to 1.2% for first quarter growth have confirmed the world’s largest economy to be in rude health, strengthening the case for a Fed rate hike on June 14th. Yellen will find the 0.60% quarterly uptick in consumer spending to be particularly pleasing ahead of what is being enthusiastically priced in by fixed income markets – the implied probability of policy action was above 80% at the last count,” commented Richard de Meo, managing director of forex trading outfit Foenix Partners.
“Unless Donald Trump repeats his NATO tactics and shoulders his way into the headlines and barring any shock disappointments in the data calendar, no market event appears capable of preventing a mid-June US interest rate hike,” he predicted.
James Knightley, a senior economist at ING, grudgingly acknowledged the upward revision, adding that growth is still poor relative to the majority of other developed markets.
“There were slight improvements in all of the key components, but it is still a very disappointing outcome, mainly caused by a clear slowdown in consumer spending and a run down in inventories.
“The Federal Reserve remains of the view that this softer growth period is ‘transitory’, but the high frequency numbers for the second quarter are not exactly pointing to a huge rebound. Indeed, today’s durable goods report wasn’t particularly encouraging for investment given the non-defence capital goods orders (ex aircraft) missed heavily on the downside. The fall in 1Q GDP quarterly profits isn’t exactly a positive for investment spending either,” Knightley opined.
Reflecting the mixed views on the GDP numbers, stocks were little changed on balance.
The Dow Jones was down 8 points at 21,075 but the S&P 50 was unchanged at 2,415.
Shoes and boots maker Deckers Outdoor Corp (NYSE:DECK) put is best foot forward in early trades, rising 18% and topping the leader board on the New York Stock Exchange.
Analysts had been expecting a loss of six cents a share for the first quarter, but the Ugg boots maker’s underlying net income was positive and equivalent to 11 cents a share.
Also flying high was Veeva Systems Inc (NYSE:VEEV), which provides cloud-based software to the life sciences sector.
Its shares rose 7.5% to US$66.38 as first quarter numbers topped expectations.
Canaccord Genuity responded by lifting its price target from US$48 to US$70.
Market preview: GDP revision to deter some of the bears
Ahead of the long weekend, the usual reluctance to keep open positions is evidencing itself.
With indexes at record levels, traders were expected to bank some profits.
Stock markets will be closed on Monday for Memorial Day.
The Dow Jones average was looking at opening at around 21,050. according to spread betting quotes, which would have represented a fall of 33 points, but an upward revision to first quarter gross domestic product saw the expected loss trimmed to 20 points.
Growth in US gross domestic product in the first quarter was revised upward to 1.2% from an initial estimate of 0.7%.
The broader-based S&P 500 was seen opening some three points lower at 2,412.
Cloud-computing company Nutanix Inc (NASDAQ:NTNX) rose by one-sixth in pre-market trading after it said more big name corporate customers were signing up for its services.
The company said it gained 790 customers in the third quarter of its fiscal year, contributing to sales growth of 67% from a year earlier, despite declining revenue from one of its biggest customers, Dell.
Footwear maker Deckers Outdoor Corp (NYSE:DECK) gave a boot up the backside to its share price by posting a profit in the final quarter of its fiscal year.
Analysts had been expecting a loss of six cents a share, but the Ugg boots maker’s underlying net income was positive and equivalent to 11 cents a share.