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Midday Market Update

Stocks Lower After Jobs, Manufacturing Data

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U.S. Market    
Stocks started May off on a downbeat today after worse-than-expected economic data.

The ADP employment report showed that the economy added 119,000 private-sector jobs in April, below the 155,000 expected by economists. ADP also revised March’s data down to 131,000 from 158,000. The data comes ahead of Friday’s closely watched unemployment rate and payroll data.

Manufacturing activity slowed in April according to the ISM’s Purchasing Managers Index. The reading of 50.7 was slightly below expectations, and off from 51.3 in March. Any reading over 50 indicates an expansion in the manufacturing sector.  

Construction spending fell 1.7% in March from February levels, driven by a 4.3% decline in Government spending. Economists had expected a 0.7% increase. 

At midday the DowS&P 500 and Nasdaq were each down 0.4%.

Stocks on the Move
 Comcast (CMCSA) continues to  produce solid cable results as it increases overall market share in the residential and small-business markets. Television customer losses worsened during the first quarter versus a year ago but remained significantly better than those of peer  Time Warner Cable (TWC). Management blamed the increase in customer losses on the decision to take price increases across a broader swath of the customer base this year while also increasing equipment fees. NBC Universal posted solid results across most segments, with the broadcast business lagging considerably following a strong showing last quarter. Shares were up over 2% at midday.

 Merck (MRK) reported weak first-quarter results that  fell short of both our expectations and those of consensus. In the quarter, intensifying generic competition and slowing sales growth from key products led to a 7% operational sales decline year over year and partly caused Merck to lower its full-year earnings per share guidance by 4%, to $3.45-$3.55. On the bottom line, Merck exceeded our expectations thanks to a low tax rate. Shares fell 2% on the report.

Shares of  Time Warner (TWX) were down 1% after the firm  reported first-quarter results. Overall revenue was flat but adjusted operating income increased 7%. Sales were weighed down by a 4% drop in the filmed entertainment segment, due to fewer international TV syndication availabilities in the quarter as well as soft box office sales for its film business. The cable network sales and operating profit improved 3% and 11%, respectively, boosted by a 5% increase in affiliate fees and a 1% decline in advertising revenue. The lower ad revenue was due mainly to the timing of the NCAA basketball tournament games, which had fewer games in this year's first quarter.

Foreign Markets
Several international markets were closed today. In late trading, the FTSE 100 was up 0.3%. The Nikkei 225 fell 0.4% on the day. 

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.