European markets are called to open higher this morning.
Stocks closed mixed on Tuesday as investors digested a weak outlook from Hewlett-Packard, a grim read on the housing market and an unexpected drop in April industrial production.
Despite those negative factors, stocks ended the session well off the lows set earlier in the day.
The Dow Jones industrial average (INDU) lost 69 points, or 0.6%, to close at 12,780. The Dow was down more than 150 points earlier in the day.
The blue chips were dragged lower by a 7% drop in shares of Hewlett-Packard (HPQ, Fortune 500). The PC maker reported a 3% increase in sales but warned the current quarter will be hurt by the Japanese quake impact and weak PC sales.
The broader market indexes closed relatively flat, with the Nasdaq Composite (COMP) rising 1 points, or less than 0.1%, to 2,783; and the S&P 500 (SPX) falling less than a point to end at 1,329.
The negative HP news as well as two disappointing economic reports kept investors on edge.
On Tuesday, the Commerce Department said housing starts plunged a worse-than-expected 10.6% in April, while the Federal Reserve said industrial production was flat in April due in part to the Japanese earthquake. Economists were looking for a gain in the industrial production figures.
“There’s a lot of negative sentiment in the market at the moment,” said Stephen Carl, head trader with Williams Capital.
Shares of raw materials and construction companies were also dragged lower, with Caterpillar (CAT, Fortune 500) shares falling 4% and Cummins (CMI, Fortune 500) and Alcoa (AA, Fortune 500) shares falling 3%.
Financial shares were among Tuesday’s top performers, led by JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Capital One Financial (COF, Fortune 500) and USBancorp (USB, Fortune 500).
After stocks and commodities hit multi-year highs last month, trading has been volatile the past two weeks. Commodities such as oil and silver have fallen sharply while stock investors wait for the conclusion of the Federal Reserve’s bond-buying program at the end of June. The Dow is down more than 2.5% so far this month.
“The market is not turning actively defensive, but we may be close to a market top because people don’t want to go into this market with the end of quantitative easing,” said Bruce McCain, chief investment strategist at Key Private Bank.
The major indexes are on track for the fourth day of declines in five sessions.
Asian stocks rose, helping the region’s benchmark index snap four days of losses after the yen touched a one-week low against the euro and as companies reported higher profits. Commodities gained, with oil advancing from the lowest level in almost three months.
Events this Week
Wednesday: Discount retailer Target (TGT, Fortune 500) is forecast to report a profit of $668 million on sales of $16 billion, up 3% from a year ago.
In the afternoon, investors will turn their attention to meeting minutes from the Federal Reserve’s April meeting for hints on how the Fed will bring its QE2 program to a close.
Hewlett-Packard (HPQ, Fortune 500) posts results after the market’s close.
Thursday: The government’s weekly report on initial claims for jobless benefits is expected to show a drop to 420,000 from 434,000 in the previous week.
No change is expected from the April index on leading economic indicators, following a 0.4% rise the month before.
Also out in the morning is the Philadelphia Fed index for May, a regional reading on manufacturing. The index is forecast to fall to 18, from 18.5 the previous month.
The National Association of Realtors will release its April reading existing home sales. Economists are looking for home resales to rise to an annualized rate of 5.2 million units, from 5.1 million in March.
On the earnings front, Sears Holdings (SHLD, Fortune 500) is expected to announce results in the morning, while Gap (GAP) will report in the afternoon.
Friday: Chinese Internet company Dangdang (DANG), which is similar to Amazon.com and made its debut in the U.S. markets in December, will deliver first-quarter results before the opening bell.