MarketView for May 3

Summary 

Share prices were lower on Tuesday due to increasing concern over the sustainability of the rally in light of fresh concerns with regard to earnings growth in the coming quarters. Of growing concern were energy shares, which were also hit by a fall in oil prices. Meanwhile, oil futures lost more than 2 percent. The S&P 500 fell for a second day after hitting its highest level in nearly three years on Friday at the end of a two-week rally. Volume was higher than we have seen lately as approximately 8.3 billion shares changed hands on the three major exchanges, a number that was above the 7.73 billion shares that have traded on average so far this year.

The Nasdaq was pressured by losses in Sears Holding after it said it will lose money in the first quarter. Cognizant Technology Solutions was another drag, falling on heavy volume due to a slowing growth rate. Sears's estimate of a quarterly loss late on Monday sent its shares down 9.9 percent to $75.88. Cognizant dropped 5.7 percent to $77.52 on its highest volume since August 4, 2009 as slowing growth rate from hefty levels seen last year to precedence in investors’ eyes.

Chinese Internet stocks fell, with search engine Baidu down 5.2 percent to $139.84 in heavy volume ahead of the initial public offering of Chinese social networking site Renren. Interest in the smaller Facebook competitor was clear last week as Renren raised the expected price range of its IPO 30 percent to $14 from $12 per share.

Alcoa closed out the day up 2.6 percent to close $17.67 on market talk that Rio Tinto was lining up a bid to buy the aluminum company. However, the two banks rumored to be financing the deal are unlikely to be involved.

A poll by Reuters on Tuesday indicated that fund managers lowered slightly their exposure to equities in April and raised their allocation in bonds.