Tech stocks rally but 3M drags down Dow

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Potential weakness in US economy ahead?

Cornerstone Macro's Michael Kantrowitz on the state of the markets and the U.S. economy.

The Nasdaq ended higher Thursday after good earnings reports from Facebook and Microsoft late Wednesday, but the Dow Jones Industrial Average was dragged down by the biggest slump in manufacturer 3M's shares in about 30 years.

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Amazon, Ford Motor and Starbucks all report earnings after the bell Thursday.

Facebook shares rose after its first-quarter numbers showed growth in advertising revenue despite the threat of a $5 billion fine from regulators.

The Dow Jones Indusrial Average ended lower though as a sharp decline in 3M shares dragged the 30-stock index down.  The Dow fell after 3M reported earnings that were much lower than expected, the company cut its full-year outlook, and announced plans to cut 2,000 jobs worldwide. Shares of the industrial, health-care and consumer products company saw their biggest one day fall since the market crash in 1987 on high volume of more than 11 million shares, cutting its market capitalization by more than $16 billion. 

Microsoft climbed as its better-than-expected earnings were driven by a jump in its cloud server revenue.

The benchmark S&P500 index was little changed.  Earlier this week, the S&P 500 notched an all-time closing high and remains about half a percent below its intraday record.

TickerSecurityLastChange%Chg
I:DJIDOW JONES AVERAGES25585.69+95.22+0.37%
SP500S&P 5002826.06+3.82+0.14%
I:COMPNASDAQ COMPOSITE INDEX7637.008585+8.72+0.11%

More than 170 S&P 500 companies have reported first quarter results so far, according to FactSet. Of those companies, 78 percent have posted better-than-expected earnings. Refinitiv data through Thursday morning showed that Wall Street now expects S&P 500 first-quarter earnings to be level with the year-ago quarter, a sharp improvement from the 1.1 percent decline expected on Wednesday, and better than the 2 percent fall expected at the start of April.

Investors are hoping that company earnings will sustain the global rally that lifted the S&P500 index to a record high earlier this week, though concerns remain over the strength of the global economy. U.S. first-quarter gross domestic product data due Friday should offer more clues.

In economic news, the Commerce Department said orders for durable goods posted the biggest increase in March since last summer, suggesting a rebound in manufacturing, led by autos, planes and networking equipment. While the industrial sector is still expanding, the ongoing U.S. trade dispute with China and a weaker global economy are providing headwinds.

U.S. Treasury yields rose Thursday after the solid data on durable-goods orders suggested business spending picked up. The 10-year Treasury note yield edged up to 2.536 percent, while the 2-year note yield was around 2.330%.

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Southwest Airlines reported a big drop in quarterly profit but it still beat analyst expectations. The gains came despite the carrier canceling thousands of flights in the period due to a dispute with its mechanic's union and the grounding of Boeing’s 737 Max jets.

Shares of UPS fell hard after harsh storms hit the delivery company's revenue in the first quarter. However, high demand for faster delivery options boosted the company's ground and air shipping volumes during thee three-month period.

TickerSecurityLastChange%Chg
MMM3M COMPANY166.09+0.22+0.13%
LUVSOUTHWEST AIRLINES CO.51.15+0.19+0.37%
FBFACEBOOK INC.181.07+0.20+0.11%
MSFTMICROSOFT CORP.126.23+0.05+0.04%
UPSUNITED PARCEL SERVICE INC.95.85-0.32-0.33%

Oil prices slipped on Thursday with the international benchmark Brent ending down for the first time in five days, and U.S. West Texas Intermediate retreating from six-month highs seen earlier this week on news President Trump is moving to restrict Iranian oil exports further.

U.S. WTI ended around $65.21 a barrel while Brent crude slipped to $74.35.

Gold prices rose for a second day with investors remaining nervous about emerging markets as the Turkish lira and the Argentine peso slumped and even though the U.S. dollar hit a six month high. Spot gold rose to $1,277.38 an ounce.

The dollar extended gains to a four-month high.

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