Earnings Beat Expectations and Home Sales Rise: Market Recap

Stocks continued Wednesday’s slump and declined on Thursday. An unexpected contraction in Chinese manufacturing mixed with ongoing insecurity surrounding the Federal Reserve’s plans for quantitative easing seemed to be enough to offset positive domestic manufacturing and housing data. Initial claims for unemployment insurance for the week ended May 18 fell 23,000 to 340,000, slightly better than expectations. The four-week moving average declined 500 to 399,500… (Read more.)

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The Housing Market Receives Another Impressive Surprise: The Fed-induced recovery in the real estate market continues to boost some areas of the economy, as new single-family home sales in the United States rose more than expected in April. On Thursday, the Commerce Department reported that purchases of new homes, measured by contracts signed, increased 2.3 percent to a seasonally adjusted 454,000-unit annual pace last month, compared to the revised March rate of 444,000 units. This is the second best level since July 2008. Home sales are up 29.0 percent compared to April 2012… (Read more.)

Meanwhile, home prices increased 1.9 percent in the first quarter of 2013, according to the latest Federal Housing Finance Agency report. This is the seventh consecutive quarterly rise in the purchase-only, seasonally-adjusted index, and indicates strong upward momentum for U.S. house prices. Home prices were up 7.2 percent on the year… (Read more.)

Will Central Bank Stimulus Keep Manufacturing Alive? The slowdown in U.S. manufacturing continued in May, according to Markit’s Flash U.S. Manufacturing PMI report. The purchasing managers index registered 51.9, its lowest reading since October, and the second consecutive month of slowing growth. However, this reading was still better than expectations. At a glance, it appears that U.S. manufacturing is standing upright, although still heavily supported by policy… (Read more.)

Here’s your Cheat Sheet to today’s top stock stories:

Pandora (NYSE:P) closed the regular session up 4 percent and climbed as much as 8 percent higher in post-market trading after reporting fiscal first quarter earnings. GAAP revenue increased 55 percent on the year to $125.5 million, beating the average analyst estimate of $123.83 million. Adjusted earnings were a loss of $0.10 per share, in line with analyst estimates.

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Gap (NYSE:GPS) closed the regular session up 0.78 percent but gave up those gains in post-market trading after reporting first-quarter earnings. Net sales increased 7 percent on the year to $3.73 billion, beating analyst estimates for $3.68 billion. Diluted earnings increased 51 percent on the year to $0.51 per share, missing the average estimate of $0.69 per share.

Rue21 (NASDAQ:RUE) closed the day up 22.98 percent after announcing that it has entered into a definitive agreement “under which funds advised by Apax Partners will acquire all outstanding shares of rue21 for $42.00 per share in cash. The transaction is valued at approximately $1.1 billion. The transaction price represents a premium of approximately 23% to yesterday’s closing share price and approximately 42% to the 90-day volume weighted average price.”

Dollar Tree (NASDAQ:DLTR) closed the day up 3.76 percent after reporting earnings that came in ahead of expectations. Revenue climbed 8.26 percent on the year to $1.87 billion, in line with the average estimate. Adjusted earnings increased 18 percent to $0.59 per share, beating the average analyst estimate of $0.57 per share.

Hewlett-Packard (NYSE:HPQ) closed the day up 17.10 percent after reporting fiscal second-quarter earnings that beat expectations. Net revenue declined 10 percent on the year (9 percent after adjusting for currency) to $27.6 billion, beating the average estimate of $28.12 billion. Adjusted diluted earnings declined 11 percent on the year to $0.87 per share, beating the average analyst estimate of $0.81 as well as its own guidance for earnings in a range between $0.80 and $0.82 per share… (Read more.)

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Why Are U.S. and European Central Banks Going In Opposite Directions? As the EU battles to keep inflation near its 2 percent benchmark, the European Central Bank announced a firm commitment today to maintain support for its ailing economy. ECB Executive Board member Peter Praet reaffirmed the need for the euro zone to avoid deflation and increase lending en route to a healthy recovery, two factors which show stagnant growth currently. From January 2013 to April, inflation in the EU has fallen from 2 percent to 1.2 percent, marking a period of decline not seen since 2008… (Read more.)

You Should Listen to Warren Buffett On Economic Moats: Warren Buffett once said, “In business, I look for economic castles protected by unbreachable moats.” The castle is a metaphor for a company, and the moat represents a strong competitive advantage. Naturally, a wider moat offers more protection in the long-term. The Oracle of Omaha has provided a great deal of wisdom over the years, but this piece of insight is more evident than ever… (Read more.)

Don’t Miss: Will Central Bank Stimulus Keep Manufacturing Alive?