May 23 - U.S. equities close far above their worst levels of the day as investors take the positive side of the debate on whether the Federal Reserve is close to tapping the brakes on its $85 billion-a-month stimulus program. Conway G. Gittens reports.
Wall Street sees its first two-day sell-off in a month, but the weakness was nowhere as intense as it was in Asia where stocks in Japan tumbled 7 percent and Singapore suffered its biggest loss in a year. Despite all the confusion of whether the Federal Reserve is, or is not, close to curtailing its stimulus program, U.S. investors once again showed the willingness to buy off the lows, with stocks finishing with only modest declines. Wall Street is nothing short of resilient, says Jason Weisberg, managing director, Seaport Securities. SOUNDBITE: JASON WEISBERG, MANAGING DIRECTOR, SEAPORT SECURITIES (ENGLISH) SAYING: "This market has absorbed every negative headline that's been thrown at it. Whether its geopolitical, economic, corporate earnings, domestic politics, terrorism, the threat of a nuclear strike by North Korea, every negative headline that this market could possibly see has been thrown at it and it has shrugged every headline off that's been negative time and time again." St. Louis Fed President James Bullard may have helped. Speaking in London, he said he does not think the Fed is "that close" to begin withdrawing stimulus. H-P upgraded at Jefferies and nearly a dozen Wall Street firms raised price targets on the stock one-day after the tech company raised its outlook for the year. Shares of H-P surged 17 percent to their best close in just over a year. After the bell, a net-loss at music streaming company Pandora was in line with forecasts and the revenue outlook for the current quarter is above forecasts. As for its customer base - user growth was 35 percent above year ago levels. On the economic calendar: New Home Sales. Purchases jumped 2.3 percent in April with the median price of a new home surging to a record high above $271,000. Meanwhile, applications for jobless benefits reversed a prior gain. The data coincides with the week the Labor Department takes the survey used for the monthly jobs report. Not all the data were upbeat - though. Manufacturing activity hit a preliminary seven-month low this month, according to financial data firm Markit. In European action, stocks were down two percent across the board. Reasons cited: fear of a pullback in stimulus by the Federal Reserve and weak manufacturing data out of China.