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Stocks Race Near All-Time Highs Despite Weak PPI Data


Today's financial recap and tomorrow's financial outlook.

Stocks shook off mixed economic data to stage a solid rally today.

The Producer Price Index fell 0.4% in April, easily missing the +0.1% consensus. Excluding food and energy, prices fell 0.2%.

Jobless claims for last week were 264,000, beating the 273,000 consensus.

S&P 500 futures initially dropped on the PPI data release this morning, but traders bought the opening dip.

The S&P hit a morning low of 2100.43, but powered higher to finish at 2121.10, up 1.1% and within striking distance of the 2125.92 all-time high.

In early trading, biotechnology and transportation stocks showed significant relative weakness, but they powered higher throughout the day to post gains.

Index leader Apple (AAPL) rose 1.3 % to $128.XX after UBS raised its iPhone sales estimates.

Burger chain Shake Shack (SHAK) put in an impressive initial rally on its very strong first-quarter earnings report, but it collapsed into the closing bell and finished down 4.2%.

Avon Shares (AVP) traded as high as $8 intraday on a takeover offer that turned out to be a hoax. An SEC filing indicated that a private equity firm supposedly called PTG Capital Partners was bidding $18.75 per share for Avon, but Avon said that it did not receive any such offer. Media outlets were also unable to confirm that PTG even exists.

In earnings news, Cisco System (CSCO) traded down 1.0% despite beating analysts' earnings and revenue expectations. Guidance was in-line, which may have spurred profit-taking after a solid rally off the March lows.

Retailer Kohl's (KSS) took an 13.3% hit on a significant revenue miss, which drive weakness in the sector. The Market Vectors Retail ETF (RTH) rose just 0.2% today, representing significant underperformance vs. the major averages.

Gold and silver extended their gains on the mixed economic data and the dollar's modest drop.

US Treasury yields also pulled back, providing support for interest rate sensitive sectors like real estate and utilities.

European equities exhibited impressive strength as bond yields fell.

In commodities, crude oil fell, while natural gas rose X.X% on a roughly in-line inventory report.

In international news, the Bank of Russia said it will start buying $100 to $200 million in rubles daily to support its international reserves. According to a statement, it is not trying to keep the ruble at a certain price. The ruble fell sharply against the US dollar and euro.

Media outlets including Bloomberg and the Wall Street Journal are reporting that the People's Bank of China told lenders not to raise deposit rates despite having been given permission to do so 3 days ago. China cut rates for the third time in six months on Sunday and just received a batch of negative economic news, so the news is not entirely surprising. The Shanghai and Shenzen Composites were slightly positive, despite weakness in most Asian markets.

Friday's Financial Outlook

In US economic news, the biggest data point tomorrow will be University of Michigan Sentiment Sentiment, which will be released at 10:00 a.m. ET. We'll also see Empire Manufacturing, Capacity Utilization, and the Baker Hughes US Rig Count.

On the global front, Japanese Consumer Confidence, UK Construction Output, and Canadian Existing Home Sales will be reported.

There are no major earnings reports on the calendar.
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