Blog : Stocks Regain Some Lost Ground

by Ed Zwirn on April 26th, 2013

The market for everything from penny stocks to blue chips regained some ground last week, with the Dow Jones Industrial Average closing at 14,712.55 Friday, up more than 1.1% over the prior week's 14547.51, but still shy of the14,865.06 record close from the week before that.

Most of the economic news that hit our penny stock radar this past week was disappointing, ranging from anemic housing and durable goods numbers to a relatively weak GDP showing. Whether this showing is enough to allow the continued good news we've seen on the penny stock front remains an open question, but investors looking for stocks to buy need to be aware of these economic headwinds.

Monday morning's existing home sales announcement was a slight disappointment, with the figure for March pegged at 4.92 million, lower than the consensus 5.01 million and down from February's revised 4.95 million, but still 10.3% higher than March 2012. March new home sales came in at 417,000, higher than both the 415,000 consensus and February's 411,000.

Wednesday's March durable goods orders announcement was also disappointing for penny stocks, with that key indicator falling 5.7%, more than the 3.3% priced into the market and a far cry from the adjusted February increase of 4.3%.

Finally, advance Gross Domestic Product figures released by the government Friday morning show that the U.S. economy expanded at a rate of 2.5% in Q1, not bad after rising only 0.4% in Q4 2012 but a disappointment compared to the 2.8% rise the market had been expecting and perhaps an alert for your penny stock portfolio, if it contains a company that would be adversely impacted by slowing U.S. growth.

Looking ahead, economic news events worthy of a penny stock picker's attention include:

--Monday morning's announcement is expected to show a 0.3% rise in March personal income, following a February 1.1% increase. Personal spending is expected to rise only 0.1%, following a February rise of 0.7%.

--Wednesday announcements are expected to shed further light for penny stock investors on prospects for the U.S. economy, starting with a morning update which is expected to show a 0.4% March rise in construction spending, following a 1.2% increase the prior month. Wednesday afternoon's auto sales release will also be closely watched for any sign of pickup or slowdown from March's 5.3 million. April truck sales are supposed to be announced as well, with that figure last weighing in at 6.7 million.

--Without a doubt the most important figures to be watched by penny stock investors this week will be Friday morning's jobs numbers. With the consensus calling for an April non-farm payroll rise of 150,000, following March's disastrous 88,000, any job-creation number falling below expectations are likely to weigh heavily on the stock market. The overall unemployment rate is expected to hold steady at 7.6%.

--Also on Friday morning, look for an announcement of a March decrease in factory orders to the tune of 2.5%, following a February rise of 3%.