Mixed Data Pushes US Stocks Lower On Tuesday

The markets were not friendly to bullish investors today as all three major indexes were down.  The NASDAQ and S&P were down 1.11% and 1.27% respectively, closing at 1796.18 and 911.97.  The Dow Jones Industrial Average was down 107.46 or 1.25% as it closed at 8504.67.  Gold saw prices rise as the dollar weakened settling at $932.20, while oil dropped as expected demand declined, settling at $70.47.  The 10-year saw prices rise as the yield dropped to 3.661%.

Best Buy (BBY) reported earnings of $153 million, or $0.36 per share for the quarter which ended May 30.  This was down from the same period the year before, when they reported earnings of $0.43 per share or $179 million.  Revenue was up 12% to $10.1 billion for the Minneapolis-based retailer, this however missed the average analyst expectation of $10.4 billion, with the Best Buy also reporting that sales fell 6.2% at stores which have been open for at least 14-months.  Best Buy also announced in their earning release that they saw a gain in market share of 2% in the US primarily due to the liquidation of Circuit City, but this was still less than the 5% annualized market share gain that analysts were expecting.  Best Buy has been hurt significantly in the current economic state as demand for consumer electronics has been crippled with people spending less on wants and more on needs.  Best Buy’s management announced that they would be cutting back on capital expenditures and trying to cut cost in an effort to offset poor demand.

In tech news, Microsoft (MSFT) was one of the few members of the NASDAQ that was able to hold on to early gains.  Microsoft was up, as the Redmond, Washington company was upgraded by an analyst for Jefferies & Co. who raised its target price from $22 to $26.  The upgrade comes as the analyst cites that companies will buy software from Microsoft this coming year as Microsoft has ended service for Windows XP forcing corporate clients to upgrade to Microsoft’s Windows 7.  Windows 7 release date was moved to October 22 from January so that PC’s sold during the holiday season will have Windows 7.  In addition to Windows 7 the analyst cites that the software giant deserved the upgrade as they have been cutting costs, in particular by eliminating reimbursement for discretionary items.  Microsoft has also benefited as their new search engine, Bing, as received good reviews.  Microsoft is up over 20% year to date.

Housing news was very positive today, as home starts rose 17.2% to a seasonally adjusted 532,000 in May, far exceeding the expected 7% rise in starts.  Permits also increased 4.0% to a 518,000 annual rate, beating economists’ estimate of 2.4%.  Single-family starts were up 7.5% to 401,000, as single-family starts have been up for the past three months.  Construction was also up in housing with two or more units and in homes with five or more units, up 61.7% and 77.1% respectively.  Despite this, the housing crisis is not over yet as inventories remained high and tight credit and rising unemployment deterring demand.  Housing starts are 45.2% then they were in May of 2008.

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