After The Close - Stocks pulled back in afternoon trading following an earlier rally that carried the Dow Jones Industrial Average to an all-time high. But, as it turned out, a record close on that venerable blue-chip index will have to wait for another day. At the end of the session, the Dow managed a 32-point advance, after having been up by more than 100 points around midday. Elsewhere, the NASDAQ and the S&P 500 fared worse, with those benchmarks falling 16 points and three points, respectively.
The morning started out on sound footing, with the weekly report from the Labor Department on initial jobless claims showing a drop of 26,000, to 319,000, for the week ended May 3rd. The decline halted a three-week string of increases that caused a degree of concern about the health of the labor market. But the previous weeks’ upturn in claims is largely seen as being driven by the disruption caused by a late Easter holiday and spring breaks at schools.
Overall, today’s labor market data is more compatible with this year’s trend of an average of more than 200,000 jobs a month being added. Those figures, in turn, provide confidence that the economy will pick up as the year progresses, on the thinking that consumers will have more to spend.
Also supportive early on was another day of testimony to Congress by Fed Chair Janet Yellen, this time in front of a Senate panel. Ms. Yellen’s affirmation that the nation’s central bank would continue to offer strong support to the economy provided the spark for yesterday’s rally on Wall Street.
Another positive was an unexpected rise in China’s exports and imports in April, after sharp declines in the prior month. That injected a dose of optimism into investors that the world’s second largest economy may be shaking off a modest slowdown.
As the day wore on, though, the tone of trading became more cautious. Stocks haven’t done much this year after 2013’s large dose of bullishness produced eye-popping gains.
Leadership in the stock market has become an issue, too, with the high-growth momentum stocks that were all the rage not that long ago now being regarded in a harsher light. Problems at some big-name banks have hurt sentiment toward financial stocks, as well. In fact, the sector generating the best performance in 2014 has been the utilities group, primarily seen as defensive.
Nevertheless, nothing seems too terrible, and further signs of economic improvement could prove a plus for the stock market at some point. - 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 U.S. stock market is pressing higher today. Some of the strength on our shores may be an extension of gains in the overseas markets. Notably, investors there were pleased with supportive comments from the ECB President. The Bank of England, too, is leaving its interest rates unchanged. At just past noon in New York, all the major averages are in positive territory, which is encouraging. Specifically, the Dow Jones Industrial Average is up 92 points; the broader S&P 500 Index is advancing nine points; and the technology-heavy NASDAQ, is ahead 37 points, for an almost 1% gain. Market breadth shows considerable support for equities, as advancers are ahead of decliners by about two to one on the NYSE. Strength can be seen in most of the market sectors. There is decisive leadership in the technology area. The telecom and financial stocks are also making strides. In contrast, some weakness can be seen in the energy group, as the price of crude oil and many other commodities are lower today. Further, the utility issues, which have been relative outperformers lately, are also slipping.
Technically, stocks have been quite volatile, and it has been hard for shares to advance and hold their gains. Too, the NASDAQ has been weak, and that is concerning. Nonetheless, we have seen little panic selling, and sentiment is still favorable, for the most part. For instance, the VIX is just above 13, which is a very tame reading, suggesting a bullish bias.
There was one major economic report released this morning. Of note, initial jobless claims for the week ended May 3rd, came in at 319,000. This was down from the prior week’s reading, and also a bit better than many economists had expected. Weekly continuing jobless claims also showed some progress, which further lends credence to the idea that the employment situation is on the mend. Tomorrow, we will get a look at wholesale inventories for the month of March.
Traders have received a few more earnings reports to sift through. Recently, Tesla (TSLA) posted decent quarterly figures, but investors had concerns about the outlook. That stock is lower. Also in the high-priced crowd, Priceline (PCLN) shares are up slightly after that company issued a mixed report. After the bell, we will hear from technology provider Symantec (SYMC). - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – It’s another busy day on the earnings front, and notable pre-market advancers include shares of coffee company Keurig Green Mountain (GMCR), solar energy solutions provider Solar City (SCTY), which appears set to recoup most of the losses suffered yesterday, restaurant operator Wendy’s (WEN), satellite television provider Dish Network (DISH), offshore drilling contractor Transocean (RIG), natural foods producer WhiteWave Foods (WWAV), and media and entertainment company Twenty-First Century Fox (FOXA).
Not all earnings reports were upbeat, however. Indeed, shares of electric vehicle manufacturer Tesla Motors (TSLA), online travel agency Priceline Group (PCLN), and biotech company Regeneron Pharmaceuticals (REGN) are all moving lower ahead of the bell on disappointing March-period results and/or outlooks, with TSLA showing considerable weakness. – Matthew E. Spencer
At the time of this article’s writing, the author had positions in TSLA.
Before The Bell - Volatility is clearly the name of the game on Wall Street these days. And rarely has this been more so than it was yesterday, when the equity market waxed and waned all through the day before finally closing suitably mixed. Specifically, stocks rallied at the outset, with the Dow Jones Industrial Average surging to a triple-digit gain, while the tech-laden NASDAQ tacked on a smaller advance, as some early weakness in the tech group put a cap on the gains.
But these good feelings did not last, and within an hour, or so, stocks stumbled anew, led lower by a plummeting NASDAQ, with that index at one point falling to a 60-point loss, which equates to nearly a percentage point and a half. But the market did not stay down there for very long, and like a resilient fighter it managed to get off of the mat and to rally through the afternoon and into the close, where most of the averages, save for the aforementioned NASDAQ, ended up in the plus column. The latter could not quite make it all the way back, as some high-profile names still were in the red by the conclusion of trading.
All told, the Dow added 118 points, to close above 16,500; the Standard and Poor's 500 Index gained 10 points, ending the latest trading session at 1,878; but the NASDAQ, while trimming its earlier 60-point deficit, still closed out the day's proceedings at 4,067, off 13 points, while the small-cap Russell 2000 ended close to where it began, after having once been down by some 15 points on weakness in the riskier asset names.
Among the various sectors, there was a considerable dichotomy as well, with the utilities gaining, but the health care, selective high-tech stocks, and the grocery store industry pressing lower, on major weakness in AOL (AOL), which fell 21% on the day, and Whole Foods Market (WFM), which tumbled 19%, leading the way lower among some erstwhile winners. A number of tech names, besides the aforementioned AOL, also pulled back on the day, which explains the NASDAQ's underperformance, although old-line tech issues held up well, for the most part, especially among the high-dividend payers. There seems to be a growing intolerance for risk these days, which explains why the Dow and the Standard and Poor's 500 Index are holding up better than the NASDAQ, which remains some 300 points off of its multi-year high of 4,371.
Of course, earnings however troubling in some instances, were only part of the story. There also was a near-absence of economic news, save for a slightly disappointing report on productivity. In general, this has been a light week for business metrics, but next week will be much busier, with data scheduled for release on retail sales, producer and consumer prices, industrial production and factory usage, housing starts, and consumer sentiment. As to news other than earnings and economics, there is the situation in Ukraine, which continues to bounce around, depending on the day and the apparent mood of the principals involved. Our sense is that this trying international problem will linger for some time yet, with a logical impact on the global markets, especially in Europe, due to that region's proximity to Ukraine and Russia, and also to the Continent's heavy reliance on oil and gas from Russia. The effect on the European markets has been significant of late, especially for Germany's DAX. Yesterday, tensions in that very troubled region seemed to ebb just a bit, and that likely contributed to the subsequent comeback by our equity market. Specifically, Russia's President Vladimir Putin seemed to soften his tone somewhat. Also, Fed Chair Janet Yellen, in testimony before Congress yesterday opined that the economy was now on track for solid growth this quarter. And Wall Street likely found such talk reassuring, as well.
Meanwhile, the earnings beat continues, albeit just not as heavily as earlier in the reporting cycle. A progressively slower rate of reporting will be the rule over the next couple of weeks, save for reports from the retailers, which typically are on a January, April, July, and October reporting cycle.
Looking ahead to the new day, following the elevated volatility thus far this week, we find that the markets in Asia were up strongly overnight, while they are still pressing a bit higher in Europe this morning, although they trimmed their earlier gains somewhat after the European Central Bank voted to keep interest rates on hold rather than reduce them further. ECB President Mario Draghi is now about to hold a news conference where it is expected that he will address the chronically low inflation rate. Finally, after yesterday's seesaw session, our futures are up slightly with just under an hour to go before the starting bell sounds. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.