The stock markets in the United States climbed as data showed expansion in the service industries in the country last month, which overshadowed concerns regarding the escalation of the conflict between Russia and Ukraine as well as the contraction of manufacturing in China.
The Institute for Supply Management reported that the non-manufacturing sector in the United States grew 2.1$ to 55.2% in April compared with the 53.4% growth rate recorded in March. Economists surveyed by Bloomberg forecasted rate of 54% for the non-manufacturing sector, which represents nearly 90% of the economy.
Third Point's Dan Loeb discusses their new positions in a letter to investor reviewed by ValueWalk. Stay tuned for more coverage. Loeb notes some new purchases as follows: Third Point’s investment in Grab is an excellent example of our ability to “lifecycle invest” by being a thought and financial partner from growth capital stages to Read More
On the other hand, the conflict in Ukraine spread to the Black Sea gateway of Odessa as the Kiev government aims to oust separatist from its east industrial heartland over the weekend. Seven people died from the fighting in the eastern city of Kramatorsk.
Meanwhile, the manufacturing sector in China declined for the fourth month in April. According to HSBC Holdings plc (ADR) (NYSE:HSBC) (LON:HSBA) and Markit, the manufacturing purchasing manager’s index (PMI) was 48.1%, which was lower than the 48.4% average estimate and preliminary estimate of 48.3%. A manufacturing PMI below the key 50% indicates contraction.
In a statement, Qu Hongbin, chief economist at HSBC said, “The latest data implied that domestic demand contracted a slower pace, but remained sluggish. Both the new export orders and employment sub-indices contracted, and were revised down from the earlier flash readings. These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum.
In a telephone interview with Bloomberg, Peter Sorrento, a senior portfolio manager at Huntington Funds commented, “These geopolitical issues become widespread concerns, “Our view has been we’re going to get a transition that in effect we’ll quietly see a correction that takes place on the sector level, but not on the market level. If that doesn’t materialize, the market is very clearly, because of the slowdown we’re seeing in growth, vulnerable here that we could very easily see a correction.”
Warrant Buffett, chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) said, “Anybody that thinks American business is not doing well should just look at corporate profits,” during the recently held annual meeting of the conglomerate on May 3.
- Dow Jones Industrial Average (DJIA)- 16,530.55 (+0.11%)
- S&P 500- 1,884.66 (+0.34 %)
- NASDAQ- 4,138.06 (+0.31%)
- Russell 2000- 1,126.21 (-0.23%)
- EURO STOXX 50 Price EUR- 3,171.29 (-0.21%)
- FTSE 100 Index- 6,822.42 (+0.20%)
- Deutsche Borse AG German Stock Index DAX- 9,529.50 (-0.28%)
- Nikkei 225- 14,457.51 (-0.19%)
- Hong Kong Hang Seng Index- 21,976.33 (-1.28%)
- Shanghai Shenzhen CSI 300 Index- 2,156.47 (-0.10%)
Stocks in Focus
The stock price of Pfizer Inc. (NYSE:PFE) dropped 2.57% to $29.96 per share after the pharmaceutical company reported lower –than-expected revenue for the first quarter due to the weak demand for Lipitor and Viagra. The company posted $0.57 earnings per share and $11.37 billion revenue compared with the $0.56 earnings per share and $12.07 billion revenue estimated by analysts polled by Thomson Reuters.
The shares of Sothebys (NYSE:BID) increased 3.25% to $44.80 per share after the company agreed to appoint Dan Loeb, hedge fund manager of Third Point LLC and two of his candidates to serve as board of directors, thereby settling the proxy fight between the auction house and Third Point—its largest shareholder with 9.6% stake.
Tyson Foods, Inc. (NYSE:TSN) fell 9.87% to $38.44 per share after the company reported its second quarter profit that missed estimates due to higher expenses and weak results in China. The company reported $0.60 earnings per share compared with the $0.63 earnings per share expected by analysts.