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Stocks struggle following mixed economic reports

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After Friday’s disastrous trading session, the new week got off to a slow start. Although the S&P 500 Index advanced 0.50% to 1,307 after Monday’s opening bell, by 10:23 the S&P 500 dropped to 1,366 and the Nasdaq Composite fell 1.08% to 2,978. Miami-based corporations saw their stocks advance briefly, before making abrupt declines.

The stock market’s early boost followed the Commerce Department’s report on Retail Sales, which surged by 0.8% in March, beating expectations for an increase of only 0.3%. Nevertheless, the New York Fed’s Empire State Manufacturing Survey was a big disappointment because the Business Conditions Index declined to 6.56 in April from 20.21 in March. Economists surveyed by Dow Jones Newswires had expected the index to drop to just 17.50. The New York Fed’s report quickly erased the early-morning gains with this revelation:

The general business conditions index dropped fourteen points to 6.6, suggesting that while growth continued, the pace slowed over the month. The new orders index was little changed at 6.5, indicating a modest increase in orders, and the shipments index fell twelve points to 6.4, indicating a slower pace of growth for shipments.

Of the three major stock indices, the Dow Jones Industrial Average was the only index which managed to spend the entire day in positive territory. The Dow closed at 12,921 for a gain of 71 points. The S&P 500 slipped by a mere 5 basis points (0.05 percent) to finish at 1,369. The NASDAQ Composite lost 76 basis points (0.76 percent) to end the day at 2,988.

Miami-based corporations achieved mixed results in Monday’s trading. Carnival Cruise Lines (CCL) led the group, with a gain of 70 basis points (0.70%) to close at 31.44. Ryder System (R) advanced by 40 basis points (0.40%) to finish at 49.94. Royal Caribbean (RCL) sank by 1.25% to close at 26.96. Lennar (LEN) declined by 1.23% to end the day at 25.79.

Our “thought for the day” comes from Barry Ritholtz, who recently provided us with some good trading tips, under the heading: “My Rules”. So, here are The Ritholtz Rules:

1. Make sure you understand what your holding period is before you establish any position.

2. Traders should NEVER let any losing trade turn into an investment.

3. Strong investments should be given the benefit of the doubt, rather than taking the quick profit.

4. Winning trades should be allowed to run, but require a new exit strategy.

These are fairly basic but oft overlooked ideas. Understand them or create your own, but please don’t just wing it. That’s a real formula for disaster.

The following companies will be playing “beat the number” on Tuesday, with the release of their quarterly earnings reports: Gannett Company (GCI), Charles Schwab (SCHW), Mattel (MAT) and Citigroup (C). Good luck!

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