Conflicting Data Has Stocks Stuck in Neutral

Stock markets are stuck in neutral today as good economic data and earnings reports cancel out the bad. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has hovered near flat most of the day and is down 0.11% as of 3:15 p.m. EDT, while the S&P 500 (SNPINDEX: ^GSPC  ) is off 0.23%.

The bad economic news was a jump in new unemployment claims from 328,000 to 360,000 last week. This was worse than expected, but we're still well below the unemployment claims we saw last year, if you're looking for a silver lining. Meanwhile, April building permits rose to a seasonally adjusted 1.02 million, ahead of estimates, though housing starts declined to a seasonally adjusted 853,000 compared with 1.02 million in March. The housing market -- particularly new-home construction -- is key to an economic recovery. Add these figures to other economic indicators, and investors didn't see much reason to buy or sell today.

The positive earnings news came from Cisco Systems (NASDAQ: CSCO  ) , which has shot 13% higher. Revenue rose 5.2% to $12.2 billion, and earnings of $0.51 per share beat estimates by $0.02. Yesterday, IDC predicted that IT spending will slow from 5.6% a year ago to 4.9% this year, and competitor Juniper Networks recently reported weaker-than-expected results. That put a negative sentiment in investors' minds, so the earnings miss today was a big surprise. 

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Hewlett-Packard (NYSE: HPQ  ) bounced back from a loss yesterday to post a 1.9% gain. The company is getting favorable reviews for its 13-inch Split x2 and 10-inch SlateBook x2, which are intended to straddle the line between tablet and notebook. Investors seem to seesaw on this stock every day, depending on the mood of the market and reports from the PC industry. The bottom line with HP is that its businesses are in a tough strategic position, which makes investing in its stock a crapshoot right now. 

The bad earnings news today came from Wal-Mart (NYSE: WMT  ) , whose stock is down 2.2%. The company reported a 1% increase in revenue to $114.2 billion, but analysts had expected $116.3 billion. On the bottom line, a profit of $3.78 billion, or $1.14 per share, also fell short of estimates, and the sell-off was on. Same-store sales excluding fuel were only up 0.2% as consumers, pressured by higher taxes, spent less during the quarter. Wal-Mart was hit harder than most retailers by the increase in payroll taxes in the first quarter, because its customers tend to have low to middling income and therefore feel the pinch more than higher-income earners. 


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