Mixed Economic Data Gives Investors Little Direction

Conflicting economic data once again has U.S. stock markets searching for direction. The National Association of Home Builders/Wells Fargo Housing Market Index climbed to 44 this month from 41 in April, another sign that the housing market is improving. On the flip side, manufacturing production fell 0.4% in April, and industrial output dropped 0.5%, which was lower than the 0.2% drop forecast by economists. Stocks edged lower in early trading before rallying and then settling in for modest gains. As of 3:15 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 (SNPINDEX: ^GSPC  ) have gained about 0.2% each. 

Alcoa (NYSE: AA  ) is down 0.8% as investors fear that weak demand and low aluminum prices will only get worse. Europe piled onto the weak U.S. manufacturing data by announcing a 0.2% decline in France's GDP and just 0.1% growth in Germany in Q1. These should be two of the healthier economies in Europe, so if they're not growing, then Europe as a whole will continue to struggle. Alcoa is dependent on macro growth from the U.S., Europe, and China, so today's numbers should leave investors feeling queasy at best.

Hewlett-Packard (NYSE: HPQ  ) is the worst-performing stock on the Dow, falling 3.3%. Research firm Gartner is reporting a 20.5% decline in PC sales in Western Europe during the first quarter. Competing research firm IDC said it expects IT spending worldwide to grow just 4.9% this year, down from 5.6% a year ago. Smartphones will drive what little growth there is, and they're not HP's strong suit. This is still a tough stock to bet on, given slowing IT growth and the rapid decline of a PC business that once drove HP's results. 

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP is rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor detour on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

In the flight from risky stocks, investors have pushed shares of consumer staple Procter & Gamble (NYSE: PG  ) 1.4% higher to lead the Dow today. At an investor conference yesterday, CFO Jon Moeller hinted that new products could obsolete entire product categories and give the company an advantage over competitors. P&G saw organic sales growth of just 3% in the fiscal third quarter. Management had expected more, and it hopes to change that with a new line of products. For now, investors see the stock's juicy 3.1% dividend yield as a reason to buy in uncertain economic times. 


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2433607, ~/Articles/ArticleHandler.aspx, 9/19/2014 8:02:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement