Wall Street Sags, But Ends Off Session Lows -- PROMO

Category: Daily Promo / May 23, 2013 7:26PM EDT


U.S. stocks slipped on Thursday (May 23) but finished sharply off their session lows as a rally in Hewlett-Packard's shares offset worries about weak Chinese manufacturing data and the prospects of the Federal Reserve reducing its monetary stimulus.

Trading was choppy as many traders were adjusting their positions ahead of the long holiday weekend. Markets will be closed on Monday for Memorial Day.

Hewlett-Packard shares jumped more than 17 percent to a fresh 52-week high a day after the world's largest PC maker raised its outlook. The stock's surge supported the Dow and helped limit the S&P 500's decline.

For most of the morning, the market had been pulled lower by worries that the Fed's stimulus may be scaled back sooner than hoped and after weak factory data in China.

The Dow Jones industrial average fell 12.67 points, or 0.08 percent, to 15,294.50 at the close. The Standard & Poor's 500 Index slipped 4.84 points, or 0.29 percent, to finish at 1,650.51. TheNasdaq Composite Index dropped 3.88 points, or 0.11 percent, to close at 3,459.42.

Hewlett-Packard Co shares surged 17.1 percent to end at $24.86 (USD), a day after the computer maker raised its 2013 earnings outlook following quarterly results that beat low expectations. The stock touched a new 52-week high of $24.95 earlier in the session.

Signs of improvement in the housing and labor markets also helped indexes come off their lows by midday.

Earlier, the S&P 500 traded below its 14-day moving average before bouncing back above it. Holding above that level would be positive sign to investors as it would suggest the uptrend is still intact.

On Wednesday (May 22), the S&P 500 .SPX posted its biggest decline in three weeks after minutes from the U.S. Federal Reserve's latest meeting showed some officials were open to tapering large-scale asset purchases as early as at the June meeting.

The minutes came in the wake of comments from Fed Chairman Ben Bernanke, who said the Fed could scale back the pace of its bond purchases at one of the "next few meetings" if the economic recovery looked set to maintain forward momentum.

Ted Weisberg of Seaport Securities gives the Fed high marks for communicating with the markets it's policy intentions.

"The Fed has been very consistent and I think that certainly floor-wide the community here feels the Fed has really been truthful and upfront about what their intentions are. And as long as people have a clear idea of what's happening and what people's intentions are, with no doubt in mind, there's no reason to feel nervous about the movement of the markets," said Weisberg.

When the Fed may decide to slow or halt its program of buying $85 billion of bonds a month has become one of the biggest questions on investors' minds. The central bank's stimulus efforts have helped propel markets to all-time highs this year and investors are trying to gauge whether a change in the program could spell the end of the rally.

On the economic front, the number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting strength in the labor market. New home sales rose in a sign that the sector's rebound is still intact. But separate data showed manufacturing slowed for a second straight month in May.


(Video Source: REUTERS)