After The Close - The major stock averages closed higher today in a session that experienced notable ups and downs. At the end of the day, the Dow Jones Industrial Average rose 89 points and the NASDAQ moved up 11 points. Market breadth was not altogether convincing, though, with the number of advancing shares topping decliners by a three-to-two margin on the Big Board, but more NASDAQ stocks were in the red than there were gainers. Such a trend in the tech-laden NASDAQ shows a continuation of the cooling off period for high-flying momentum stocks.
Volatility was prominent today, with the Dow alternately up about 100 points and then down 110, before regaining its equilibrium to push higher in late afternoon trading. The NASDAQ, meanwhile, was down a hefty 1.9% at one point, before coming back.
More worrisome news out of Ukraine prompted the intraday shift in sentiment. Word that Ukrainian forces stormed an airport held by pro-Russian militants rattled Wall Street, just as yesterday’s news of a Russian aircraft repeatedly flying close to a U.S. ship in the Black Sea over the weekend caused some jitters. The White House also reportedly noted that pro-Russian factions are trying to provoke Ukrainian forces into a fight. Closing earlier than U.S. markets, stocks in Europe took it on the chin today as a result.
Helping the Dow-30 were gains in shares of Coca-Cola (KO - Free Coca-Cola Stock Report) and Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report). Both companies reported upbeat earnings.
But a rise in the price of the 10-year Treasury note, with its yield falling from 2.65% to 2.62%, seemed to speak to the nervousness on the part of investors. That was all the more apparent after an uptick in inflation at the consumer level in March. Normally, bond prices sell off on any hint of inflation.
Investors seeking a safe haven didn’t find one in gold today, though, where the price of the yellow metal fell on indications that the slowdown in China is limiting demand for gold.
Elsewhere, oil quotations fell about $0.50 a barrel in New York on the thinking that Libyan ports blocked by rebel groups would soon reopen, and boost global supplies. Oil prices had been getting a lift from the increase in geopolitical tensions, with Russia being a big oil producer.
Tomorrow brings a slew of corporate earnings and economic data to consider, aside from any further developments regarding Russia and Ukraine. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:30 PM EDT - The major U.S. equity indexes all opened to the upside at the start of today’s trading session. Stocks got an early lift, thanks, in part, to favorable first-quarter earnings reports from blue chips Coca-Cola (KO - Free Coca-Cola Stock Report) and Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report). But, after registering modest gains, the indices showed various degrees of red as the noon hour approached in New York. The broad S&P 500 and Dow Jones Industrials were both down about half of a percentage point, while the tech-heavy NASDAQ was the hardest hit, showing a loss of around one and one-half percent.
There’s been little economic news to provide any real direction for investor sentiment today. The Labor Department’s report on the Consumer Price Index this morning was relatively benign, with costs rising only slightly more than expected in March. Elsewhere, the New York Federal Reserve’s Empire State Manufacturing Index fell to a reading of 1.3 for April, down from 5.6 in March, while the National Association of Home Builders reported a slight increase in homebuilder sentiment for that month.
Across the Atlantic, European markets have also had a rough go of it, spending most of their respective sessions in the red. The downside has been led by Germany’s DAX, which had lost nearly two percentage points as it neared the close. France’s CAC-40 and London’s FTSE fared comparatively better, each sustaining declines of less than one percentage point. - Mario Ferro
At the time of this article’s writing, the author did not have positions in any companies mentioned.
Stocks to Watch from The Survey– The earnings calendar is starting to heat up, with reports from two Dow-30 components out this morning. Beverage giant Coca-Cola (KO – Free Coca-Cola Stock Report) and healthcare company Johnson & Johnson (JNJ – Free Johnson & Johnson Stock Report) both delivered first-quarter earnings that pleased investors, and the two equities are moving modestly higher ahead of the bell, as a result. Shares of Entergy Corp. (ETR) are also up slightly in the premarket, after the electric utility issued better-than-expected preliminary first-quarter results and raised its guidance.
Finally, telecommunications equipment company Motorola Solutions (MSI) has agreed to sell its enterprise business to wireless networking company Zebra Technologies (ZBRA) for $3.45 billion in cash. Investors on both sides of the deal applauded the news, and shares of MSI and ZBRA are indicating higher openings this morning. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - It has been a volatile fortnight of trading on Wall Street, with the swings in the direction of trading at times both swift and rather pronounced. Yesterday was no different, especially in the final hour of the day when the recently volatile NASDAQ Composite gave back a gain of 51 points in a matter of minutes, briefly falling below 4000 before regrouping in the final minutes to finish modestly higher. In fact, it was a trading pattern exhibited by all of the major averages, with the exception of the Dow Jones Industrial Average, which stayed out of negative territory despite a patch of heavy selling.
All told, the Dow Jones Industrials added 146 points, the NASDAQ recovered late to finish 23 points higher, and the broader S&P 500 Index tacked on 15 points. Overall, each of the top 10 groups finished in the black, with the day’s rally led by the basic materials, consumer staples, and energy stocks. It also was a nice change of pace for the recently battered technology and biotech issues, with the former showing some renewed strength late.
What created yesterday’s volatility was a mixed bag of news. On our shores, the news on the earnings and economic fronts was constructive for stocks. The market got a boost from better-than-expected retail sales data. Specifically, the Commerce Department reported that retail spending rose 1.1% in March, the biggest monthly advance since September, 2012. However, the news from overseas was dourer and clearly, for a short period, roiled investors. Stocks weakened considerably after reports surfaced that a Russian jet buzzed a U.S. warship several times in the Black Sea this past Saturday despite complaints from the United States. Last night, we learned that President Obama and Prime Minister Putin spoke by phone, but little headway was made in quelling the growing tensions between Russia and Ukraine. This fluid geopolitical situation is likely to add volatility to the market until some progress in finding a solution to the escalating conflict is made.
Meantime, the new day will bring the first wave of heavy earnings news, with reports due on three Dow-30 members—Intel (INTC - Free Intel Stock Report) reported is due after the close of trading. The financial sector will also be closely monitored by investors the next few days, as a number of industry heavyweights are on the docket this week. Our sense is that the bulls would have a tough time mounting a sustained rally without some good news from the closely watched financial stocks. We will also be keeping a close eye on the recently battered biotech and technology stocks to see if yesterday's move higher has any sustaining power.
Just minutes ago, we received the day’s only major economic news when the Labor Department reported that consumer prices rose a modest 0.2% in March. Increases in the shelter and food indexes accounted for most of the seasonally adjusted all items increase. We think the benign report does nothing to alter the Federal Reserve’s thinking on short-term interest rates. The companion report on producer (wholesale) prices showed just enough inflation to quell any possible fears about deflation on these shores.
Elsewhere, Asia’s major indexes finished mixed overnight, with China’s averages lower. Selling there was prompted by sentiment that China will miss its GDP target of 7.5% when that data are released this evening. Meantime, the European bourses are directionless as trading enters the afternoon hours on the Continent. Germany’s DAX was under a bit of pressure after the German ZEW Economic Sentiment Index fell to 43.2 in April, from 46.6 in the prior month. The expectation was for a reading of 45.0.
With less than an hour to go before the start of trading on these shores, the NASDAQ and S&P 500 futures are presaging a higher opening for the U.S. markets and a continuation of yesterday’s rally. Will the bulls be able to mount a sustained comeback? We think that will depend largely on the forthcoming earnings and economic news, as well as any possible transgressions from Eastern Europe. Stay tuned. - William G. Ferguson
At the time of this article's writing, the author did not have positions in any of the companies mentioned.