Market Wrap for Thursday, May 16: A Small Pullback For U.S. Stocks as Economic Data Disappoints

Stocks pulled back late on Thursday as bullish sentiment could not overcome disappointing economic reports. Initial jobless claims, housing starts and a reading of the Philadelphia Fed's Business Outlook Index all surprised to the downside.

Although it is far too early to predict a correction in the market, investors who have been pouring cash into stocks will certainly want to see signs that Thursday's economic reports were a one-off. Even despite the disappointment, the losses on the major averages were minor, underscoring this market's strength.

Major Averages

The Dow Jones Industrial Average fell 42 points, or 0.28 percent, to 15,233.

The S&P 500 lost around 8 points, or 0.50 percent, to 1,650.

The Nasdaq shed around 6 points, or 0.18 percent, to 3,465.

Jobless Claims

Initial jobless claims rose to 360,000 for the week ending May 11 from an upwardly revised 328,000 for the week ending May 4. This compared to consensus expectations calling for an increase to 330,000.

Continuing claims fell to 3.009 million for the week ending May 4 from 3.013 million for the week ending April 27. This compared to the consensus estimate of 3.005 million.

CPI

CPI fell 0.4 percent in April after declining 0.2 percent for the month of March. This compared to consensus estimates calling for a decline in consumer prices of 0.2 percent.

On a core basis, which excludes food and energy, CPI rose 0.1 percent for the second consecutive month. This was slightly less than the consensus which expected prices to rise by 0.2 percent.

Housing Starts

Housing starts declined by 16.5 percent in April to 853,000 from a downwardly revised 1.021 million in March. This was the lowest number of housing starts since November 2012. The consensus had expected housing starts to fall to 970,000.

Philadelphia Fed

In a surprise reading, the Philadelphia Fed's Business Outlook showed that manufacturing activity in the Philadelphia region contracted in May. The index fell to -5.2 from 1.3 in April. The consensus had expected the Philly Fed Index to rise to 2.5.

Commodities

Crude oil futures were higher on Thursday despite a fall in stocks. Late in the session, NYMEX crude futures were up 0.82 percent to $95.07 while Brent contracts had added 0.12 percent to $103.80. Natural gas lost more than 3 percent and was last trading at $3.94.

Gold continued to slump as the economic data showed few signs of inflation. Gold lost 0.70 percent to $1,386.40 while silver futures actually gained 0.32 percent to $22.73. Copper was up a little less than 1 percent at last check on Thursday.

In the grain complex, corn and wheat lost ground. Corn was last trading down 1.42 percent while wheat lost 0.86 percent. Movers in soft commodities included cocoa, which lost 2 percent, and orange juice, which was last down 1.47 percent.

Bonds

Bond prices climbed on weaker than expected economic data on Thursday. Near the close of equities, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was up a little better than 1 percent to $118.60. Yields fell as prices rose on the session.

The yield on the 2-Year Note was down one basis point to 0.23 percent. The 5-Year Note yield fell five basis points to 0.78 percent. Both the 10-Year Note yield and the 30-Year Bond yield lost seven basis points to 1.87 percent and 3.09 percent, respectively.

Currencies

The U.S. dollar was largely unchanged on Thursday. Near the close, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was flat.

Late in the day, the EUR/USD pair was up 0.16 percent to $1.2897. The only other significant mover on the day was the GBP/USD which added around 0.53 percent.

Volatility and Volume

The CBOE Volatility Index climbed on Thursday but remains at very low levels amid a stock rally that has taken the Dow and S&P 500 to new all-time highs. The VIX was trading up around 3 percent near the close to 13.20.

Share volume remains light despite bullish investor sentiment. On Thursday, around 93 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 125 million.

Stock Movers

Aegerion Pharmaceuticals (NASDAQ:AEGR) surged after the company provided a pricing update on its Juxtapid drug. An analyst at Leerink Swann also raised his price target on the stock. Near the close, AEGR was up better than 30 percent.

Tesaro (NASDAQ:TSRO) rose more than 14 percent after the company announced it would be presenting clinical data for Niraparib at the 2013 ASCO Annual meeting.

Networking giant Cisco Systems (NASDAQ:CSCO) rose almost 13 percent after the company's fiscal third-quarter earnings results.

SolarCity (NASDAQ:SCTY) shares climbed more than 10 percent on Thursday after the company announced a $500 million financing deal with Goldman Sachs (NYSE:GS).

Tesla Motors (NASDAQ:TSLA) continued its sharp rally on Thursday after its Chairman and CEO Elon Musk said he was investing another $100 million into the electric car-maker. The stock closed up a little less than 9 percent.

Infinity Pharmaceuticals (NASDAQ:INFI) fell more than 22 percent after JPMorgan said that investors are "growing increasingly skittish" ahead of June's ASCO cancer conference where Infinity is expected to release safety and tolerability data for its Leukemia drug.

Chip-maker Advanced Micro Devices (NYSE:AMD) lost almost 13 percent after analysts at Goldman Sachs cut their rating on the stock to Sell.

Jack in the Box (NASDAQ:JACK) lost almost 4 percent on the session after the company's fiscal second-quarter earnings results.