U.S. Indexes Lower on Weak Housing Starts; HP Falls 8%

Bikram Pandey
17 May, 2011
New York City

U.S. stocks traded lower after housing starts in April declined 10.6% and industrial production was weaker than expected. Wal-Mart Stores Inc said same store sales at its U.S. locations declined 1.1%, eight quarterly fall in a row. Hewlett Packard lowered its annual outlook.

[R]10:20 AM New York – U.S. stocks traded lower after housing starts in April declined 10.6% and industrial production was weaker than expected. Wal-Mart Stores Inc said same store sales at its U.S. locations declined 1.1%, eight quarterly fall in a row. Hewlett Packard lowered its annual outlook.[/R]

U.S. indexes opened lower after housing starts and industrial production were weaker than anticipated and Hewlett Packard lowered its annual outlook. Markets in Europe turned lower after German economic sentiment dropped for the third month in a row but Greece and Spain completed the bond offerings.

U.S. housing permits in April increased 4.0% from March or fell 12.8% a year ago month to 551,000.

According to the U.S. Commerce Department, housing starts in April fell 10.6% from March. Housing completion increased 4.1% from March or fell 25.5% from a year ago month to 554,000.

April industrial production was unchanged after rising 0.7% in March.

The data released by the U.S. Federal Reserve showed manufacturing production fell 0.4% and mining increased 0.8%. Utility output increased 1.7% and capacity utilization for total industry fell to 76.9%.

German benchmark index declined after private think tank ZEW survey indicated a decline in economic confidence for the third straight month.

The index fell to 3.1 in May from 7.6 in April and significantly below the historic average of 26.5. The mood turned sour after Greece debt restructuring gained momentum in the last three months.

Spain sold 5.47 billion euros of 12-month and 18-month treasury bills that attracted higher interest compared to the previous auction. Greece sold 1.625 billion europs of 13-week of treasury bills.

UK annual inflation measured at consumer prices increased to 4.5% in April from 4.0% in March. In the year to April, Road Price Index, the measures the inflation for retail consumer items, annual inflation fell to 5.3% from 5.4% to March.

Stock Movers

Wal-Mart Stores Inc ((WMT)) declined after the retailer reported first quarter net income increased to $3.4 billion or 97 cents a share compared to $3.3 billion or 87 cents a share. Sales rose 4.4% to $103.4 billion that included $1.3 billion in currency gains.

Quarterly sales at its U.S. locations increased 0.6% to $62.7 billion and same store sales declined 1.1%, eight quarterly sales decline in a row.

Saks Inc ((SKS)) increased 2.7% after it reported fiscal first quarter net increased to $28.4 million or 16 cents a share compared to $18.8 million or 11 cents a share. Sales increased 5% to $726 million. Same store sales rose 10.2%.

The TJX Companies ((TJX)) declined 2.1% after the retailer said first quarter net declined to $266 million or 67 cents a share compared to $331.4 million or 80 cents a share. Revenues increased 4% to $5.22 billion and estimated second quarter net per share between 81 cents and 86 cents.

Hewlett Packard ((HPQ)) fell 8% after it second quarter net increased to $2.3 billion or $1.05 a share compared to $2.2 billion or 91 cents a share and revenues increased 3% to $31.6 billion.

For the current quarter HP estimated earnings of 91 cents a share and revenues between $31.1 billion to $31.3 billion. For the year HP estimated revenues between $130 billion and $131.5 billion and earnings of $5 a share compared to previous estimate of $5.20 to $5.28 a share.