Midday Market Update

Today is May Day and many stock exchanges are closed around the world. It’s been a fairly quite day on Wall Street. As of noon, the major indexes are holding on to small gains.

One economic report showed that the April ISM rose to 40.1 from 36.3, a bit above the consensus 38.4 and the highest reading since September. This is good news, but the ISM will probably stumble in future months due to the plant shutdowns at GM and Chrysler.

The Federal Reserve said today that it will reveal the results of its stress test on May 7. The idea of the stress test is to see how well the nation’s largest banks will hold up if the recession worsens. Of course, I’m more worried about how the U.S. government will hold up if the economy worsens.

There was good news from consumers. The April consumer confidence index rose more than expected. The index increased from 57.3 to 65.1. That’s the highest level since the credit market fell apart last year. In November, the index got down to 55.3 which was the lowest reading in 30 years.

Shares of Mastercard (MA) are taking a hit today. The company’s earnings fell to $2.81 a share from $3.38 last year. Spending on credit cards is clearly down and the company said that its income targets may not be reached this year. Mastercard used to be a buy in my Blue Chip Growth service, but I’ve downgraded it to a hold. If you don’t own it, don’t buy it. If you do own it, don’t sell it.

HMS Holdings (HMSY) is doing very well today. The company helps the healthcare industry avoid billing errors and money management problems. Last year, they saved clients over $1 billion. Shares of HMSY are up more than 12% today thanks to strong earnings. HMS Holdings just reported earnings of 21 cents a share, four cents more than estimates. HMSY said it expects “an excellent 2009.” The stock is an outstanding buy in my Quantum Growth service.

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