4:30 PM ET - Wall Street ended a strong week on a moderate up note today. Indeed, relatively positive earnings reports from the corporate world offset some troublesome news from Europe and a mixed economic showing on these shores (more on these events below). By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index had added 24, 19, and three points, respectively, making it four consecutive winning sessions. Investors shrugged off a sluggish start to the latest session, with the bulls once again in the driver’s seat at the close. Advancing issues finished comfortably ahead of decliners—to the tune of about two to one—on both the Big Board and the NASDAQ.
The latest session capped off a nice week for those long equities. For the five-day stretch, the Dow 30, the tech-heavy NASDAQ, and the broader S&P 500 Index were up 1.6%, 2.3%, and 1.8%, respectively. As noted, earnings were the biggest catalysts, specifically the latest quarterly results from Apple (AAPL) after the close of trading on Wednesday. Shares of the tech behemoth soared after the company blew out revenues and earnings expectations. The good feelings about Apple pushed other technology issues higher, as well. Other industry heavyweights to deliver strong results this week included Boeing (BA - Free Boeing Stock Report), Caterpillar (CAT - Free Caterpillar Stock Report), 3M Company (MMM -Free 3M Stock Report), and Exxon Mobil (XOM - Free Exxon Mobil Stock Report).
However, today's earnings news varied. On the plus side were reports from Amazon.com (AMZN) and Dow company Chevron (CVX - Free Chevron Stock Report), while the news from two other Dow- 30 components Procter & Gamble (PG - Free P&G Stock Report) and Merck & Co. (MRK - Free Merck Stock Report) failed to invigorate investors. Amazon shares soared on the latest quarterly results that showed a big increase in shipments. Conversely, the stock of P&G was notably weaker and weighed on the noncyclical consumer sector—the only group among the 12 major sectors to finish in the red today. Next week, continued heavy earnings news will lack the big names, save for reports from Dow-30 members Pfizer (PFE - Free Pfizer Stock Report) and Kraft Foods (KFT), as well as from automobile giant General Motors (GM) and oil concern BP PLC (BP).
The economic news was also mixed. Before the commencement of trading on these shores, The Commerce Department reported that the U.S. economy grew at annual rate of 2.2% in the first quarter of 2012, which was below the consensus expectation of a 2.6% advance. Still, there were some positive developments of note, including a 2.9% increase in consumer spending—the fastest pace since the final quarter of 2010. Then, at 10:00 A.M. (EDT), we learned that the University of Michigan’s final consumer sentiment reading for the month of April came in higher than many had expected.
Meanwhile, the news from the other side of the Atlantic continues to be less market supportive. Today, all eyes were once again on Spain, where borrowing costs continue to rise as the financially struggling euro-zone nation’s budget deficit remains a huge concern. Not helping Spain’s bond yields either was a downgrade from a major credit ratings agency earlier today. The country’s ailing banking system, which may require some outside support, and the staggering unemployment rate were behind the fixed-income downgrade. Still, European investors shook off these concerns, at least for the moment, with the major bourses on the Continent finishing the latest session nicely higher. Nevertheless, the worries about Europe still have some investors nervous, with U.S. Treasuries remaining in pretty high demand. Indeed, the yield on the 10-year Treasury note, which moves in the opposite direction to the price, eased a few more basis points, ending the week at 1.93%--its lowest level since late February. - William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:20 PM ET - The U.S. stock market got off to a choppy start this morning, but seems to be firming up once more. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 29 points (0.2%); the S&P 500 Index is ahead by two points; and the NASDAQ is higher by 12 points (0.4%). Market breadth suggests some strength, but nothing overwhelming. Notably, advancing issues are nominally ahead of decliners. On the bright side, most of the market’s sectors are showing gains, which is a positive indication. Strength can be found in the capital goods and some basic materials stocks. However, there is some sluggishness in the technology and financial names, while the consumer non-cyclical issues as a group are declining.
Some of the market’s rough start today may have had to do with a weak economic report. This morning the Commerce Department issued its initial estimate for first-quarter GDP. According to the report, GDP increased 2.2%, coming in a bit below economists’ expectations. The figure was also weaker than the 3.0% expansion logged last quarter. Later in the morning, traders got a look at the University of Michigan’s final consumer sentiment reading for the month of April. That figure came in a bit higher than many had expected. We start next week with a few key reports, including personal income and spending figures for the month of March, as well as a manufacturing report for the Chicago region.
Meanwhile, the earnings reports are still streaming in, and we will highlight a few of the market movers. In the Dow, we heard from Procter & Gamble (PG - Free P&G Stock Report). That stock is lower, after the personal products company posted mixed results. Oil giant Chevron (CVX - Free Chevron Stock Report) put out a decent report, as profits were helped by higher oil prices. Nonetheless, the stock is off slightly. Also in the Dow, Merck (MRK - Free Merck Stock Report) shares are off a bit, even though the company’s results largely matched forecasts. Elsewhere, Amazon (AMZN) shares are soaring after the online retailer posted better- than-expected revenues and profits. Starbucks (SBUX) is seeing its stock slip, after the coffee seller issued solid results, but provided disappointing guidance.
Technically, the S&P 500 Index is showing some strength, as it has been rallying for a few days. Trading volumes have been a bit better, which is also a good sign. Today’s move, assuming its holds, puts the Index just above the 1,400 mark, which probably has some “psychological” significance. - 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 – Corporate earnings are in the spotlight again today. Investors received reports from several high-profile companies after the market closed yesterday, including Internet retailer Amazon.com (AMZN). Although its bottom line slipped on a year-over-year basis, earnings came in much higher than investors expected, causing the stock to climb sharply in premarket trading. Online travel services provider Expedia (EXPE) was another big winner in last night’s earnings parade, as its first-quarter results also pleased investors. It was not all good news, however. Shares of Allscripts Healthcare Solutions (MDRX), a provider of electronic health record systems, plunged after it released weaker-than-anticipated March-period results and announced that it had fired its chairman, Philip Pead. The reason for his ouster was not immediately apparent. Shares of Deckers Outdoor (DECK) are also down sharply in premarket trading. The footwear company, whose brands include Ugg and Teva, among others, announced disappointing first-quarter results and issued a downbeat outlook for the balance of 2012. Starbucks (SBUX) stock also slipped in the premarket, but to a lesser degree. The roaster and retailer of coffee delivered decent March-period results and raised its fiscal 2012 guidance slightly, but investors appeared to be disappointed with company’s comparable-store sales.
This morning, investors received quarterly financials from three Dow-30 components, drug developer Merck (MRK – Free Merck Stock Report), oil company Chevron (CVX – Free Chevron Stock Report), and household products giant Procter & Gamble (PG – Free Procter & Gamble Stock Report). Merck reported decent results and the stock is up modestly in the premarket. However, investors’ attention will likely be focused on the company’s pipeline, which should be discussed in more detail on the earnings call. Chevron’s results received a cooler reception, though investors appeared most disappointed with P&G, which cut its guidance. Finally, there was some good news out of the auto sector, as both Ford (F) and Honda (HMC) delivered solid reports. – 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 - It continues to be mostly about earnings, as the tide of corporate profits for the recently concluded first quarter continues to favor the bulls, with the bottom-line gains rather widespread, especially in relation to the succession of target reductions earlier in the period. This clear outperformance on the profit side explains the recent resumption of Wall Street's uptrend, which has seen the Dow Jones Industrial Average--following yesterday's 114-point gain--again knocking on the door of a multi-year high. In all, the Dow, which is at 13,204, is now just about a thousand points from the all-time peak reached in 2007--which had preceded the 2009 drop to below 6,500. It has been quite a ride.
Overall, the latest session was indicative of the recent trend on Wall Street, where solid earnings have trumped disquieting news out of Europe and some less-than-compelling data of late on our shores. Specifically, the last few sessions, which has seen the major equity averages irregularly push higher, has been helped by strong results out of Apple Inc. (AAPL), 3M Company (MMM - Free 3M Stock Report), United Technologies (UTX - Free United Technologies Stock Report), and Boeing (BA - Free Boeing Stock Report). To be sure, there have been some high-profile disappointments, such as a report issued this morning by household products maker and Dow-30 component Procter & Gamble (PG - Free Procter & Gamble Stock Report). And, as if on cue, that stock is reacting to the report, and is indicated modestly lower in the pre-market.
Meanwhile, given the other news around, it is a good think that earnings have been supportive, as the past fortnight has seen listless data on durable goods orders, new home sales, housing starts, jobless claims, and industrial production issued. And on the other side of the Atlantic, the latest 24 hours has brought news of a ratings downgrade of Spain's debt and a surprisingly sharp drop in the European Commission's overall economic sentiment indicator, which has tumbled from 94.2 to 92.8. That would be consistent with the recent release of consumer confidence figures over here, as these fell back moderately in the latest month.
Furthermore, in the past few minutes, we have seen the release, by the U.S. Commerce Department, of gross domestic product figures for the first quarter. This initial estimate of opening-period economic activity showed that the nation's output increased by a pedestrian 2.2%--several ticks below the consensus forecast of 2.6%. It also was below the fourth-quarter run rate of 3.0%. Still, the report was not all that disquieting as much of the shortfall from the prior period reflected a lesser contribution from inventory investment. That suggests the current quarter could see some rebuilding of stocks, a development that would be helpful for growth on a sustained basis.
On a brighter note, the day has seen a positive reaction by the market to an upbeat release from online auction house Amazon.com (AMZN). The shares, which ended yesterday at just under $196, are indicated to open the new trading day at $228. Overall, the equity futures have retraced just a small portion of their earlier gains, mostly due to the unimposing GDP issuance, and are still suggesting a nicely higher opening for Wall Street in about a half hour from now.
At the time of this report's writing, the author did not have positions in any of the companies mentioned.