4:25 PM ET - Stocks got a bounce today after sustained selling pressure in the first half of May caused a moderate pullback on Wall Street. Shares of market leader Apple (AAPL) led the way after analysts made bullish projections about iPhone usage. That helped push up the tech-heavy NASDAQ by 68 points, or 2.5%, outperforming the Dow Jones Industrial Average’s strong 135 point (1.1%) gain. The strength was broad-based, with the number of advancing issues outpacing decliners by a wide margin on the New York Stock Exchange Composite.
Aside from technology, sectors showing special strength today included Basic Materials, where shares of Dow Chemical (DOW) and Newmont Mining (NEM) did well, and Industrials, where Boeing (BA - Free Boeing Stock Report) and Honeywell (HON) outperformed. Consumer (Cyclical) stocks also shined, including those of retailer Coach (COH). Oil shares made a comeback, as well, with the price of a barrel of crude oil rising over $1 on the NYMEX. That benefited oilfield services stocks, such as Schlumberger (SLB) and Nabors Industries (NBR).
The day was not without some notable stumbles, though. JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report), still reeling from sizable trading losses, suspended its stock-repurchase plan. Its shares fell on the news. Facebook (FB) stock also gave up ground after its much ballyhooed initial public offering on Friday failed to generate the type of enthusiasm seen in past high-profile IPOs.
As stocks rallied, the bond market gave up part of its recent gains, with the yield on the 10-year Treasury note rising to 1.74%, from 1.71%. (Bond prices move in the opposite direction of yields.)
Tomorrow brings fresh economic data on existing home sales for April, which is forecast to show a slight advance from March. Several earnings reports are also due out, including one from apparel maker Ralph Lauren (RL), whose stock rallied today in anticipation of a positive showing. Retailer AutoZone (AZO) is also expected to put up some good numbers. The same cannot be said for tech companies Analog Devices (ADI) and DELL (DELL), though, where analysts are looking for negative year-over-year profit comparisons.
Today’s market action was a nice respite from the bearishness that had developed following the growing uncertainty surrounding the euro zone’s financial difficulties, particularly regarding Greece’s status as an ongoing member of the European Union. Europe’s troubles are far from resolved, but any signs that the region will be able to muddle through its problems, rather than endure a messy breakup, would provide further fuel for the bulls. - Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
12:15 PM ET - The U.S. stock market is pushing higher this morning, showing considerable strength over the past few hours. At about noon in New York, the Dow Jones Industrial Average is up 89 points (0.7%); the S&P 500 Index is ahead 13 points (1.0%); and the NASDAQ, which is showing some leadership, is tacking on 41 points (1.5%). Market breadth is positive, as advancing issues are outnumbering decliners by about 4 to 1 on the NYSE. Most of the market sectors are participating in the rally. Strength is apparent in the capital goods, basic materials, and energy stocks. In contrast, weakness can be seen in the consumer non-cyclical names. The utilities are also lagging the broader market. The under-performance of this group may suggest that investors are willing to take on risk elsewhere in the market.
The markets here at home are probably getting a lift from an improved outlook for Europe. A recent meeting of Group of Eight leaders has produced some positive remarks about finances in the region, including a commitment to working with the financially-challenged nation of Greece. The markets in Europe are just closing out a decent session. The euro, which is now at roughly $1.28 is up a bit against the dollar today, which is also a sign of confidence.
Meanwhile, the economic news in the United States was sparse today. But, a few corporate reports are probably worth mentioning. Shares of Lowe’s (LOW) are off after the home improvement retailer posted disappointing comparable-store sales results, and issued a subdued outlook. Campbell Soup (CPB) stock is also lower, after the company reported decent quarterly figures, but issued mixed guidance. Meanwhile, shares of Facebook (FB) are down sharply, just a day after the social networking company’s IPO debut. Nonetheless, the technology sector as whole still seems strong, at least for now. In contrast, Tech Data (TECD) logged a decent quarter, sending shares of that company higher.
Technically, the markets are looking to rally after numerous consecutive days of selling. While the selloff in May has been difficult, and increased trading volumes are troubling, the S&P 500 Index is still above its upwardly sloping 200-day moving average, which suggests that the bull market may well be intact. The S&P 500 Index is now about 8% off its 52-week high, which is a typical correction. We will have to see some follow through to this morning’s up move. Hopefully, for the bulls, that will occur. - 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 – Investors are digesting some M&A announcements this morning. Indeed, shares of Yahoo! (YHOO) are higher in the premarket, after the Internet company announced a deal to sell roughly half of its stake in Alibaba back to the China-based company for $7.1 billion ($6.3 billion in cash and $800 million in preferred stock). Yahoo! plans to use the proceeds to fund share repurchases, and its Board of Directors has already approved a $5 billion increase to the company’s current authorization. Also, kidney dialysis provider DaVita (DVA) has agreed to pay $4.4 billion to acquire Healthcare Partners, a California-based operator of medical groups and physician networks. DaVita stock moved slightly lower on the news. Finally, London-based bank Barclay’s PLC (BCS) has announced plans to sell its entire 19.6% stake in the financial services company BlackRock (BLK). BlackRock shares moved modestly lower on the news.
There are still some earnings reports coming in, and home-improvement retailer Lowe’s (LOW) is in the spotlight this morning. The company’s April-period sales and earnings were slightly better than expected, thanks in part to unseasonably warm weather during the term. However, comparable-store sales were well below those of its main rival, The Home Depot (HD - Free Home Depot Stock Report) and Lowe’s management trimmed its full-year earnings guidance. The stock is down sharply in early morning trading. Shares of Campbell Soup (CPB) and Tech Data (TECD), a distributor of microcomputer-related hardware and software products, are also lower in the premarket on earnings-related news, while the stock of Tidewater (TDW), a leading provider of supply vessels and marine support services to the petroleum drilling industry, are moving higher 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.
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Before The Bell - Wall Street begins the new trading week with the bulls licking their wounds after a dismal five day stretch that saw the Dow Jones Industrial Average, the NASDAQ Composite, the broader S&P 500 Index, and the small-cap Russell 2000 decline 3.5%, 5.3%, 4.3%, and 5.4%, respectively. The primary culprits were continued worries about the euro zone—where several of its member nations are in recessions and/or battling sovereign debt problems—and the huge trading loss at JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report). Changing political landscapes in France and Greece have also raised concerns about the region’s ability to tackle the huge debt problems it faces. The lack of any major earnings news last week and uninspiring economic data on these shores did not give investors a reason to shift their attention away from Europe.
It was a struggle for all of the 12 major sectors. In particular, energy was a big laggard, with falling oil prices—the product of mounting concerns that a global economic slowdown would cut into demand for crude in the coming months—taking its toll on the performance of oil and gas stocks. The financial sector was also weighed down by the dour news from banking giant JPMorgan. Another sign that the bears are having their way right now was the lack of a “pop” in the shares of Facebook (FB), which traded in a narrow band between $38 (the initial offering price) and $45 a share despite much publicity leading up to the IPO date. The Facebook IPO did not provide much of a boost to the technology area. In all, it was a very difficult week for those industries most closely tied to the performance of the global economy.
Speaking of the economy, the week ahead will be light on data, with only five reports of note scheduled to be release. However, we will get two important reports on the long-suffering housing market, with data on existing and new home sales on Tuesday and Wednesday, respectively. Later on in the week, we will receive a report on durable goods, the latest University of Michigan Survey on consumer sentiment, and initial weekly unemployment claims. The latter metric has been disappointing the last few weeks, raising concerns about the U.S. employment picture.
Meanwhile, Europe is sure to remain a hot topic for investors in the coming days for all of the aforementioned reasons. Over the weekend, U.S. President Barack Obama met with a group of leaders from several economic powers (at the G8 summit) to discuss the turmoil in the euro zone. The President pledged to work with European leaders to balance growth with debt reduction in a coordinated effort to keep the worsening euro zone crisis from destabilizing the global economy. As trading approaches the second half on the Continent, the major European bourses are mixed, with Germany’s DAX and France’s CAC-40 higher and London’s FTSE 100 under pressure. Overnight trading in Asia was also mixed, with Japan’s Nikkei 225 finishing higher and Hong Kong’s Hang Seng ending up in the red.
There was some noteworthy news from China. Specifically, the country pledged to boost the world's second-largest economy. Not surprisingly, crude oil prices are higher, as China is a huge consumer of the commodity. A report from a major investment bank this morning saying that the balance between supply and demand of crude is tightening is also pushing crude prices higher. Coming into today, crude oil prices had fallen for seven consecutive days on the New York Mercantile Exchange.
With less than an hour to go before trading commences on these shores, the futures presage a higher opening for the market. This would be a welcomed sight for those long equities. Would a positive open to trading have any kind of staying power today? If last week’s equity market performance is any indication, the bears will likely be heard from in short time. 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.