MarketView for April 16

Summary

Solid retail sales data helped large-cap consumer stocks, while a 4 percent slide in Apple hurt the Nasdaq. Retail sales for March rose 0.8 percent, sharply higher than the forecast, sending Procter & Gamble up 1.5 percent to close at $66.78, while Wal-Mart ended the day up 1.4 percent to close at $60.58. However, the loser of the day was Apple. Apple’s shares ended the day down 4.2 percent, to close at $580.13. After a meteoric rise of 43 percent this year, Apple was probably set for some profit taking.

Nonetheless, Apple was not the market's only worry. Spain's rising borrowing costs and a weak New York state manufacturing report stirred concerns about Europe's debt crisis and our own domestic economic recovery. Spain's 10-year government bond yields climbed above the 6 percent mark on Monday for the first time since the beginning of December. Spain has acknowledged that it has probably slipped into its second recession since 2009.

Other major drags on the Nasdaq included a slide of 9 percent by Mattel, the world's largest toy manufacturer, on declining quarterly sales. Mattel's quarterly profit fell short of analysts' expectations as price increases hurt sales of its iconic Barbie dolls and Hot Wheels cars, driving its stock down 9.1 percent to $31.01.

Google's shares fell 3 percent to $606.07 on Monday, as the jury selection got under way in a high-stakes dispute over smartphone technology with Oracle. Shares of Oracle were up 0.5 percent to close at $28.64, while Google fell 3 percent.

Monday's mixed session followed last week's pullback, when both the Dow and the S&P 500 suffered their worst two-week percentage drops since late November on increasing concerns about the euro zone's debt crisis and weaker-than-expected U.S. economic data.

Earnings season will pick up steam this week, with 86 S&P 500 companies scheduled to report results. According to Thomson Reuter’s data through Monday, of the 34 S&P 500 companies to have reported earnings so far, 76 percent have reported earnings above analysts' expectations.

Trading volume for the day was light, with about 6.25 billion shares traded on the three major exchanges, a number that was well below last year's daily average of 7.84 billion shares.

Bullard Says Inflation Target Makes Sense

The Federal Reserve was neither "hawkish" nor "dovish" when it set a formal inflation target, and such a move would make sense even if the U.S. central bank had a single mandate, St. Louis Fed President James Bullard, indicated on Monday.

Bullard, in slides prepared for a speech, did not comment specifically on monetary policy ahead of next week's Fed policy meeting in Washington. Instead he defended the Fed's decision in January to target a 2-percent inflation rate.

"Much of the discussion about the dual mandate is, in my view, really about the nature of the Fed's reaction function to economic events," he said in a statement before addressing the Utah State University Jon M. Huntsman School of Business. "Inflation targeting is consistent with hawks, doves and even bubbles."

Bullard, who does not have a vote on the Fed's policy-setting panel this year, is a centrist in the spectrum of policymakers that ranges from hawks, who worry about inflation getting out of hand, and doves, who worry about the high unemployment rate that is now at 8.2 percent.

Some politicians have argued that the Fed should drop the "maximum employment" portion of its mandate and concentrate on a single mandate of "stable prices."