EmailThe 0.1% decline in the S&P 500 on Tuesday was negligible but not insignificant. The market was given a reason to rally -- or at least advance -- in the new home sales report, yet it rolled over like a 30-pound house cat in the wake of the better-than-expected data.
Ever see a 30-pound house cat roll over? It's a slow, deliberate affair that leaves the cat spent on the other side of the roll, so much so that it would rather forego catnip for a cat nap.
Fittingly, the equity market is snoozing this morning, unable to rally after yesterday's roll that left it down 3.5% for the month.
There wasn't any stirring, overnight news to shake things up.
The headlines out of Europe are more of the same; Japan, impacted by the tsunami, reported its first trade deficit for April in 31 years; the OECD left its global growth forecast unchanged from November; and neither Applied Materials (AMAT) nor Polo Ralph Lauren (RL) impressed with their earnings reports.
The Durable Orders report for April hasn't caused the cat to move either. If anything, the headlines were as ugly looking as a cat coughing up a hair ball. In nearly every category, both shipments and new orders declined from March.
Overall, durable goods orders were down 3.6% (Briefing.com consensus -2.0%). Excluding transportation, orders dropped 1.5% (Briefing.com consensus +0.6%). Nondefense capital goods orders, excluding aircraft, declined 2.6%.
The mitigating factor with the weak April report is that it followed a very strong March report, which saw overall orders increase 4.4%; orders, excluding transportation, jump 2.5%; and nondefense capital goods orders, excluding aircraft, advance 5.4%.
In this light then, it is premature to label the April disappointment as a true sign of things to come, although the headlines will provide tinder for anyone stoking the sustained slowdown argument.
Strikingly, the S&P futures actually bounced a bit immediately after the durable orders headlines hit the wires. Perhaps they did so on the notion that such data aren't going to send the Fed away anytime soon or perhaps they did so because, well, even a 30-pound house cat can still purr when it is tired.
It is anyone's guess.
The S&P futures are 0.3% below fair value. That has the cash market on course for a slightly lower open and traders looking to be tossed some catnip to get things going in a tired market.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.
