Traders-Blog.com

Stocks fell as investors consolidated some of the hefty gains posted in April, while weighing a slew of data revealing not only tame inflation but also a weakening economy. The upbeat earnings from Verizon Communication and a share buyback from Merrill Lynch could not lift the markets.

Today, the Dow Jones industrial average closed down 58.03 or 0.44% to 13,062.91. The blue-chip barometer also hit an intraday record of 13,162.06 during Monday’s session before retreating. The broader S&P 500 closed down 11.70 or 0.78% to 1,482.37, after hitting a more than six-year high last week. The tech-heavy Nasdaq composite closed down 32.12 or 1.26% to 2,525.09, after ending last week at a 6-year high. For the month, the Dow gained 5.7%, the S&P rose 4.3% and the Nasdaq soared 4.1%.

Market breadth was negative and volume was moderate. On the New York Stock Exchange, losers beat winners nearly 3 to 1 on volume of 1.71 billion shares. On the Nasdaq, decliners topped advancers by more than 2 to 1 on volume of 2.13 billion shares.

Stocks have surged in April as investors welcomed a spate of better-than-expected first-quarter earnings. With 65% of the S&P 500 having reported results, earnings are currently on track to have risen 7% from a year earlier, more than double what analysts were forecasting on April 1.

In economic news, personal income rose 0.7% in March, after rising a revised 0.7% in the previous month. Economists thought income would rise 0.5%. Personal spending rose 0.3%, missing forecasts for a rise of 0.5%. The core PCE deflator, the report’s inflation component, was flat, versus expectations for a rise of 0.1%. March construction spending rose 0.2% in the month after climbing a revised 1.5% in the previous month.

Shares of Yahoo closed down $0.30 to $28.04, after it said it would pay $680 million for the 80% of online ad exchange Right Media that it doesn’t currently own.

Stock of Verizon Communications rose 0.8%, despite posting a lower first-quarter profit after one-time costs. However, the company added an industry-leading 1.7 million net wireless customers and boosted sales by more than 6%. Verizon is also building a superfast fiber network in an effort to solidify its phone business and win back lost customers. For the quarter, it posted net income of $1.5 billion, down from a year-ago profit of $1.63 billion. Revenue rose 6.4% to $22.58 billion.

Delta Air Lines emerged from bankruptcy a year ahead of schedule after a 19-month restructuring. It has reworked operations to focus on international routes and has been able to cut its net debt by more than $9 billion, to a projected $7.6 billion at the end of 2007.

U.S. light crude oil for June delivery fell 75 cents to settle at $65.71 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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