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After The Close - Wall Street put in a constructive session today, with stocks rising modestly in the absence of any significant economic news or unfavorable global developments. At the close, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 had tacked on, in turn, gains of 21, 35, and seven points. Advancers topped decliners by handy margins of about nine to five on the Big Board and better than two to one on the NASDAQ.

Helping sentiment somewhat was a flurry of merger-related activity. Although not all of the proposed offers were accepted, as AstraZeneca (AZN) turned down Pfizer’s (PFE- Free Pfizer Stock Report) bid, the moves to make deals showed that companies will do what it takes to increase scale or otherwise gain a long-term competitive advantage. A pickup in mergers and acquisitions has been one of the bright spots in what has been a lackluster year for stocks in general.

Investors have been saddled with a number of issues of late, not the least of which was the concern that so-called momentum stocks had gotten ahead of themselves following a big run late in 2013, when just about everything went right. As is usually the case, the big growth names are largely listed on the NASDAQ, which has endured a mild correction in recent months as concerns arose that valuations were too far ahead of what companies could reasonably be expected to earn. That was not the case today, though, as strength in the technology sector helped the tech-laden NASDAQ outperform.

At the other end of the performance spectrum was the utilities group, which had otherwise been the year’s big winner as interest rates fell, fuel demand rose during last winter’s harsh weather, and the economic growth was held back by the deep freeze that set in on many parts of the country. However, interest rates rose slightly today, not just in the United States but around the globe. The yield on the 10-year Treasury note inched higher, with prices moving in the opposite direction. With nothing alarming occurring in Ukraine, the fear factor seemed to ease a bit.
Tomorrow brings another relatively quiet day for news on the economy. But a big earnings release before the opening bell from Dow-30 member Home Depot (HD Free Home Depot Stock Report) could influence trading early on. The home improvement chain’s results are an indicator for conditions in the housing market. - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the companies mentioned. 

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12:30 PM EDT - The U.S. stock market is trading notably higher today. At just past noon in New York, the Dow Jones Industrial Average is up 23 points; the broader S&P 500 Index is ahead seven points; and the technology-heavy NASDAQ is higher by 34 points. Market breadth is decidedly positive, as advancing issues are well ahead of decliners on the NYSE and on the NASDAQ. Most market sectors are participating in today’s move up, which is encouraging. The technology stocks are displaying clear leadership. Also, the industrials are trading notably higher. However, some weakness can be seen in the consumer area. Investors are also moving out of the high-yielding utilities.

Technically, the S&P 500 Index seems to have found support at its 50-day moving average, located at about 1,868. This is likely encouraging to traders closely following these key technical levels. However, it remains to be seen if the broad index can move higher from here. Breaking out of the current trading range and moving past 1,900 would be a critical development for the bulls.

Elsewhere, traders received no notable economic releases this morning. Tomorrow will be a light day for news, as well. However, things should pick up on Wednesday, as the minutes from the FOMC’s April 30th meeting are due to be released.

Finally, there has been some M&A news reported today. Specifically, telecom giant AT&T (T- Free AT&T Stock Report) has agreed to buy DirecTV (DTV). But, shares of both companies are moving lower, suggesting that traders may be anticipating that the deal could have trouble attaining regulatory approval. Elsewhere, shares of AstraZeneca (AZN) are down after the U.K. based drug company once again rejected another acquisition offer from Pfizer (PFE - Free Pfizer Stock Report).

Meanwhile, there are still a few companies reporting quarterly results. Today, shares of Campbell Soup (CPB) are trading lower, after the food company issued disappointing guidance. Urban Outfitters (URBN) issues its figures after the closing bell. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Stocks to Watch from The Survey – There was a bit of M&A activity over the weekend, highlighted by AT&T’s (TFree AT&T Stock Report) agreement to purchase satellite television provider DIRECTV (DTV) for $49 billion, or roughly $95 a share in cash and stock. The telecom giant had reportedly been eyeing DIRECTV for some time, so investors didn’t seem too surprised with the news. Indeed, DTV stock is little changed ahead of the bell, while T is down modestly. Elsewhere, United Kingdom-based drugmaker AstraZeneca (AZN) has rejected another sweetened offer from industry peer Pfizer (PFEFree Pfizer Stock Report). Pfizer said that this latest bid, which values AZN at 55 pounds in cash and stock, is its final offer. Consequently, AZN shares are indicating a sharply lower opening this morning, while PFE is up marginally in the premarket. Finally, auto parts maker Johnson Controls (JCI) has announced plans to spin off its automotive interiors business, causing the stock to climb slightly ahead of the bell.

There is not much earnings news to be aware of, although packaged foods company Campbell Soup (CPB) has reported April-period results and issued a disappointing outlook. The stock is down notably in pre-market trading, as a result. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before the Bell - Last week Wall Street provided its share of ups and downs for those long equities. The major U.S. equity indexes started the week to the upside, with the Dow Jones Industrial Average and the broader S&P 500 Index hitting all-time highs, but the bears returned by midweek and despite a nice effort by the bulls on Friday, the early week gains were retraced and then some in the case of the two aforementioned large-cap dominated indexes. It was also a seesaw week for the NASDAQ, but the technology heavy composite was able to produce a modest gain during the five-day stretch. What was notable on Friday was that the rally was led by the small- and mid-cap issues, which tends to be a bullish sign.

Meantime, the new week will begin with less fanfare, as today will be quiet on both the earnings and economic fronts. Overall, it will be a very light week for economic news. The only notable reports come from the housing sector, with data due on existing and new home sales on Thursday and Friday, respectively. Investors should also note that the minutes from the last Federal Open Market Committee meeting will be released on Wednesday afternoon. On the earnings front, the headlines will be dominated by the retailers that are still reporting their April-period results. The pack of retailers will be led by Dow-30 component Home Depot (HD - Free Home Depot Stock Report).

The lack of major stories on both the earnings and economic fronts this week, as well as many traders getting a jump on the Memorial Day holiday weekend on Friday, may result in some extended patches of light activity during the soon to begin five-day trading week. Investors should note that often when trading volume is light, volatility picks up. We would not be surprised if this scenario was to unfold, as the week begins with the market clearly overextended. The S&P 500 Volatility Index (or VIX) begins the day at just over 12, a level that clearly suggests that the market is overbought and ripe for some selective profit taking (see below). We use the term selective because recent weeks have seen a good deal of sector rotation in play. The low-interest rate environment is making the higher-yielding utilities, telecommunications, and consumer staples issues attractive alternatives to fixed-income securities, and thus we are seeing some rotation into those equity groups.

We did get some major news from the corporate world over the weekend. Specifically, Dow-30 component and drugmaking giant Pfizer (PFE - Free Pfizer Stock Report) raised its bid to acquire British rival AstraZeneca (AZN) to $117 billion. Pfizer also noted that it will walk away from the bargaining table if AstraZeneca rejects the latest offer, which has already happened. Meanwhile, two industry giants announced yesterday that they will be joining forces. Specifically, Dow-30 component AT&T (T - Free AT&T Stock Report) agreed to acquire DIRECTV (DTV) for $48.5 billion. It will be interesting to see what impact the M&A news has on the market, as investors often view deals of this magnitude as signs of the market’s underlying strength. At the very least, the AT&T deal should give a nice boost the telecommunications sector, which performed well on Friday.

With less than an hour to go before the start of trading on these shores, the futures are presaging a lower opening for the U.S. equity market. Most of Asia’s major indexes finished modestly lower overnight, while the European bourses are currently in the red. The bears should have the upper hand as trading resumes this week stateside.  - William G. Ferguson

At the time of this article's writing, the author did not have positions in any of the companies mentioned.