Equities Update: Stocks Pare Losses Late

4:20 PM, May 19, 2010 --

• NYSE down 32 (0.5%) to 6,927.21.
• DJIA down 66 (0.6%) to 10,444.
• S&P 500 down 5 (0.5%) to 1,115.
• Nasdaq down 18 (0.8%) to 2,292.60.

GLOBAL SENTIMENT

• Hang Seng down 1.83%
• Nikkei down 0.54%
• FTSE down 2.53%

UPSIDE MOVERS

(+) HPQ beat with earnings, set mixed guidance.

(+) BJ beats with Q1 profit, sales increase misses, raises FY EPS view to straddle Street mean.

(+) DE beats with Q2 results.

(+) DSCO completes revalidation of test for Surfaxin.

(+) RL tops Q4 estimates.

(+) DWA upgraded by Caris.

(+) PTV reportedly object of bidding war.

(+) M turns lower the higher once again; gets analyst upgrade.

DOWNSIDE MOVERS

(-) CTRN beats with Q1, raises outlook. The company expects slower growth in revenue from 4% to 5% from 2010 same-store sales.

(-) GERN reports positive trial data for model of idiopathic pulmonary fibrosis.

(-) HRL beats with Q2 results, raises FY EPS view to in line to above Street view.

(-) TGT beats with Q1 EPS, sales about in line.

(-) CHS meets with Q1 EPS, sales beat; analysts expected an EPS beat.

(-) ZION to sell warrants.

(-) VZ initiated at "neutral" at Cowen.

MARKET DIRECTION

Stocks end lower but well off their worst levels of the day, though volatility continued late into the session. Stocks did improve somewhat after a Federal Reserve release showed an improved growth outlook for this year. A weaker euro against the dollar earlier in the day in response to Germany's debt market curbs initially pressured stocks.

Federal Reserve meeting minutes that revealed members' belief that the economy could grow at slightly improved 3.2% to 3.7% this year allowed stocks to pare early deep losses. For the Fed, that's an upward revision from a growth range of 2.8% to 3.5% in their January forecast.

The Fed's latest forecast sees the unemployment rate, now at 9.9%, dipping to between 9.1% and 9.5% by year's end. In the January forecast, the Fed didn't think unemployment would dip below 9.5% this year. The Fed prepared the latest forecast for its late-April meeting.

But the stock market remains jittery in the wake of Germany's controversial move to ban naked short selling of some of its financial instruments in the hopes of limiting sudden swings in European debt markets. The ban covers European government bonds, credit default swaps and the shares of several financial companies.

But Germany's move sent the euro to fresh four-year lows before improving slightly. European and Asian stocks fell.

Domestically, the Labor Department said the seasonally-adjusted consumer price index fell 0.1% last month, the first decline since March 2009. The move was largely driven by energy prices. Excluding energy and food, the price index was unchanged for the second consecutive month. Economists were expecting the inflation rate to remain unchanged and the core consumer price index to rise by 0.1%, according to a Dow Jones survey. Core inflation posted its smallest year-over-year change in 44 years.

Separately, the Labor Department said real average weekly earnings rose by 0.4% in April from March. Earnings growth has been weak over the past six months, which could also complicate the recovery, rising by 1.2%.

Energy stocks are also in focus as the government readies its latest report on oil inventories that is expected to show stockpiles continuing to grow in the face of weak demand.

Among corporate movers, Hewlett-Packard (HPQ) gained after last night reporting Q2 non-GAAP diluted EPS of $1.09, beating analysts' mean expectations of $1.05 and up from 86 cents the prior year. Revenue rose to $30.8 billion. Analysts had seen revenue of $29.8 billion.

The company also raised its outlook for the full year. HP expects full year fiscal 2010 revenue growth of approximately 8-9% with non-GAAP diluted EPS in the range of $4.45 to $4.50, up from its previous estimate of $4.37 to $4.44.