Stocks Slide as GM Drags; Techs Gain
Stocks got a quick pop Wednesday after a report showed existing-home sales rose in April but quickly retreated as the previous day's optimism faded and GM stirred anxiety in the market.
But tech stocks gained, sending the Nasdaq into positive territory.
The Going Gets Tough...
Existing-home sales rose 2.9 percentto an annual rate of 4.68 million in April, up from a downwardly revised 4.55 million pace in March. The median home price dropped 15.4 percent year over year to $170,200.
The day's economic news kicked off on a sour note, as mortgage applications dropped to their lowest point since early Marchamid the recent jump in interest rates.
In the latest survey from the National Association for Business Economists, nearly 75 percent expect the downturn to end in the third quarter. But they believe unemployment will climb, even if the economy is rebounding. Forecasters say the unemployment rate should average 9.1 percent this year. They expect GDP to contract 2.8 percent for the year, worse than the 1.9 percent drop in their previous forecast.
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The U.S. Treasury sold $40 billion of debt on Tuesday and sells another $61 billion this week. The Treasury will sell $35 billion of five-year paper later on Wednesday.
General Motors was down more than 10 percent as the automaker moved one step closer to Chapter 11but sources close to the matter said they don't expect a bankruptcy filing this week. The deadline is June 1.
In Germany,the fate of GM's Opel unit is to be decided later in the day. The country's government has been considering offers from Italy's Fiat, Canada's Magna International and Belgium-listed RHJ International, as well as late entry China's Beijing Automotive Industry. But GM is not entertaining the Chinese bid, the Wall Street Journal reported.
And Chrysler could be out of bankruptcy as early as next week.
Citigroup ticked higher after the bank said it has no plans to get rid of its stakes in Chinese and Indian banks, and instead wants to increase lending in those countries. Citi's Asia-Pacific chief told the Financial Times it is in everyone's best interest for the company to growth in a region that is delivering strong profits.
Bank of America rose after the company said it's raised nearly $26 billion in capital since the stress tests were announced and that it's "well on its way" to reaching the $33.9 billion buffer set by the Federal Reserve.
But other banks were mostly lower, including JPMorgan and Wells Fargo.
The Nasdaq started pushing higher as techs barreled higher again.
Apple and Research In Motion rose for a second day after analyst upgrades on the stocks Tuesday amid encouraging outlooks on their product mix and profits.
Chips were some of the biggest percentage gainers on the Nasdaq 100, including Sandisk , Symantec and Infineon , after Sandisk renewed its NAND flash-memory chip license with Samsung Electronics.
And Twitter's co-founder said Tuesday night that the company plans to eventually charge some type of fee for the company's services. They mentioned possible revenue drivers for the online-messaging service, such as banner ads, but did not give many details.
Retailers were mostly higher after Oppenheimer initiated coverage on the sector, giving companies like OfficeMax , Lowe's and Bed, Bath & Beyond an "outperform" rating. Bed, Bath & Beyond's price target was set to $42, while the company's shares closed at $28.31 on Tuesday.
Shares of office products retailer Staples skidded after the office-supply chain beat analyst estimates but earnings fell sharply from a year earlier.
Autozone reported its earnings rose 9 percent, beating analysts' target, as the auto-parts retailer benefited from the recession trend of more Americans opting to repair their existing cars than buy new ones.
Oil giant ExxonMobil holds its annual meeting in Dallas Wednesday, and Amylin faces off with investor Carl Icahn who is trying to unseat directors in a proxy vote. Its annual meeting is at 11:30 am New York time.
Still to Come:
THURSDAY: Weekly jobless claims; durable goods; new-home sales; weekly crude inventories; Fed's Fisher speaks; Earnings from Costco, Sears and Dell
FRIDAY: GDP; Chicago PMI; University of Michigan/Reuters consumer sentiment; earnings from Tiffany
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