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Poor Results From Tech Stocks Lead Market Lower


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

Tech stocks were the big losers today following yesterday's disappointing earnings from VMware (NASDAQ:VMW). Cloud and frontier-based tech companies were hit the hardest, including FireEye (NASDAQ:FEYE), Palo Alto Networks (NYSE:PANW), and Splunk (NASDAQ:SPLK). Telecom stocks were hit particularly hard today after AT&T's (NYSE:T) poor earnings guidance in its report last night. The company saw higher profits during the quarter as it added double the expected amount of monthly subscribers, due to its new plans that don't offer phone subsidies.

Last night's inline Chinese manufacturing PMI didn't faze US steel or copper miners or manufacturers. The preliminary gauge for April rose to 48.3 from 48.0 last month, even with the 48.3 economist estimate. Copper futures ended up closing the pit session up 0.16% after trading down overnight. Flash estimates for April manufacturing PMI showed moderate growth from last month, which was enough to ratchet down easing expectations for the ECB's monetary policy meeting on May 8. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the worst performer in Europe, down 1.18%.

New home sales showed a surprise 14.5% drop in March to an annual rate of 389,000, mostly due to a record monthly rise in median home prices. The median home price in the report rose to $290,000 from $260,900 in the month prior, a monthly gain of 11.2%, the most on record. Sales suffered the most in the Southern, Western, and Midwestern regions. The Markit preliminary US manufacturing PMI for April fell slightly to 55.4 from 55.5 last month, and below the expectations of 56.0.

Facebook (NASDAQ:FB) reported earnings after the close, beating EPS by a solid $0.10. Revenues of $2.5 billion were also ahead of the $2.35 billion consensus. The company reported 82% year-on-year gains in ad revenue, and 260% gains specific to mobile ad revenue. The stock initially struggled on the news that the company's CFO would step down later this year, but finished 3% above its closing price.

Tomorrow's Financial Outlook

Tomorrow morning, weekly jobless claims will be reported. Recently, claims have reached seven-year lows, potentially because of the late Easter holiday. It's possible that the low level of claims persisted last week due to the holiday. The other report of note is March's durable goods orders. Investors will be wanting to see that demand increased for goods in March now that the extreme weather conditions have passed.

The Reserve Bank of New Zealand will make its monetary policy decision tonight. Economists expect the central bank to increase its policy rate by 0.25% to 3% and signal the end of its tightening cycle. The IFO survey of German investors' thoughts on the current economic situation and forward expectations will be released at 8:00 a.m. GMT.

Tomorrow is the busiest day of the week for earnings reports; 86 major US companies are scheduled to report. Notable companies include Freeport-McMoRan (NYSE:FCX), Stanley Black & Decker (NYSE:SWK), Time Warner Cable (NYSE:TWC), Caterpillar (NYSE:CAT), UPS (NYSE:UPS), 3M (NYSE:MMM), Visa (NYSE:V), Broadcom (NASDAQ:BRCM), Microsoft (NASDAQ:MSFT), Starbucks (NASDAQ:SBUX), Newmont Mining (NYSE:NEM), (NASDAQ:AMZN), Dunkin Brands (NASDAQ:DNKN), General Motors (NYSE:GM), and Southwest Airlines (NYSE:LUV).

Twitter: @Minyanville

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