Loading...
 

After The Close - It was a very productive day on Wall Street for those long equities, but the good showing did not come without some drama, as the major equity indexes fell sharply after an erroneous Associated Press (AP) report surfaced that said there was an attack on the White House. The Dow Jones Industrial Average fell more than 150 points on that tweet, but quickly recovered after the AP released a statement at 1:12 P.M. (EDT) saying that its account was hacked and the tweet about an attack at the White House was false. Save for this midday drama, the bulls controlled trading during the session, emboldened by a series of encouraging earnings reports (more below). By the closing bell, the Dow, the NASDAQ, and the broader S&P 500 Index had added 152, 36, and 16 points, respectively. Overall, advancing issues led decliners by about a three-to-one ratio on both the Big Board and the NASDAQ.

As noted, the news from Corporate America was encouraging today. A couple of financial giants led the charge with both Dow-30 component Travelers (TRV - Free Travelers Stock Report) and credit card company Discover Financial Services (DFS) posting better-than-expected quarterly results. The financial stocks also got a boost from news that Bank of America (BAC - Free Bank of America Stock Report) is buying back stock. Meantime, shares of Internet provider Netflix (NFLX) and retailer Coach (COH) were up sharply on positive results, specifically at the top line for the latter entity. The busy day for earnings news will be capped off by the latest results from Dow-30 component AT&T (T - Free AT&T Stock Report), which hit a new 52-week high today, and the much-anticipated report from technology behemoth Apple (AAPL) after the close of trading. The latter report could play a huge role in which way the market opens when trading resumes tomorrow morning.

Looking more closely at the top 10 sectors, there was no red ink to be found. In addition to the aforementioned strong performance by the financial stocks, leadership came from the capital goods and consumer discretionary categories. Technology issues were also in high demand today, with most of the big names, including the aforementioned Apple, Google (GOOG), and Intel (INTC - Free Intel Stock Report), finishing nicely in the plus column. 

We also got some news on the U.S. economy. A half hour into the trading day, the Department of Commerce released decent new home sales data for the month of March. Specifically, Commerce noted that sales of single-family homes had climbed last month by 1.5%, to an annualized rate of 417,000 homes. In February, such sales had totaled 411,000 homes. However, the latest month's volume was still notably lower than the annualized January level of 445,000 homes sold. Shares of the major homebuilders rose sharply on the data, with notable gains booked by leading builders Lennar (LEN) and Toll Brothers (TOL). Looking ahead, data on durable goods orders will be released tomorrow and Friday will bring the initial reading on first-quarter GDP, which is expected to be much better than the 0.4% advance recorded in the final period of 2012. Current estimates are just north of 3%.

Elsewhere, the trading results from overseas were mixed. Overnight, Asia’s major indexes fell sharply after China's flash reading of the April HSBC Manufacturing PMI fell to 50.5, which was well below both the prior month’s reading and the consensus expectation. Investors were particularly unnerved by the sharp drop in the country’s export index, which would suggest that demand for China’s goods is slowing. Conversely, the major European bourses were considerably higher, with respective gains of 2.4% and 3.6% recorded by Germany’s DAX and France’s CAC-40. Investors on the Continent looked past disappointing PMI readings from France and Germany, electing instead to focus on the possibility of an interest-rate cut at the European Central Bank's next policy meeting. Such a maneuver is often greeted positively by market participants—and that seemed to be the case once again today.   - William G. Ferguson 

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

-

12:30 PM EDT - The stock market opened higher this morning, and has been able to build strongly on its gains, so far. At just past noon in New York (EDT), the Dow Jones Industrial Average is up 146 points (1.0%); the broader S&P 500 Index is ahead 16 points (1.0%); and, the NASDAQ, which is leading the market higher, is tacking on 37 points (1.2%). Breadth is decidedly positive, as advancers are outnumbering decliners by better than 3 to 1 on the NYSE and the NASDAQ. All of the market sectors are participating in the up move. There are big gains in the financial stocks, thanks a strong jump in the life insurers. The technology issues are also big winners. Notably, the semiconductor index (SOX) is up almost 2% today, thanks to a surge in Veeco Instruments (VECO). Shares of capital goods companies are also showing leadership. However, the utility issues are lagging the broader market, due to a poor showing by the water companies. Also, the basic material issues are managing to put together just a modest advance, as the coal and mining stocks are quite weak today.

Technically, the S&P 500 Index may be attempting to push back into high ground, around the 1,600 mark. This area, which was hit in early April, may provide some resistance and moving past this may take a few attempts. Yesterday’s advance did not occur on much volume, but today’s showing, which is much stronger, is different. Investor sentiment has again turned bullish, as the VIX is lower by 6% to just over 13.50.

Today’s economic data are likely helping the bulls. After a lackluster reading on existing home sales yesterday, the housing market is looking better today. Specifically, new home sales came in at 417,000 units, annualized, for the month of March, which was up from the February figure and also a bit stronger than had been widely anticipated. The homebuilders as a group are up about 2.5% on the news. Tomorrow, we get a look at durable goods orders for March.

Elsewhere, the first-quarter earnings season is still in full swing. Netflix (NFLX) stock is dramatically higher after the video rental company posted strong results. Texas Instruments (TXN) put out a decent report and that issue is advancing nicely. Elsewhere, Coach (COH) shares are up sharply after the upscale handbag maker posted solid figures and boosted the dividend. -Adam Rosner

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

-

11:10 AM EDT - The bulls are attempting to make it three up days in a row this morning and thus far, at least, are doing a very good job of it. Specifically, after some 90 minutes of trading, the Dow Jones Industrial Average is up some 130 points, to just under 14,700. The Standard and Poor's 500 Index is up 14 points; and the NASDAQ is ahead by 34 points. Winning stocks are ahead of losing issues by some three-to-one on both the Big Board and the NASDAQ.

Behind this latest evidence of strength in the market are better earnings from a number of large, high-profile companies. This solid showing by Wall Street, beginning last Friday, follows several losing sessions, and is being fueled by optimism on the corporate earnings front, which has evolved even though some economic metrics have been lackluster at best over the past several weeks on our shores, and even more downbeat in Europe and China.

Of note, here, the Commerce Department earlier today issued data showing that new home sales had increased slightly in March on a month-to-month basis. That was a better showing than a comparable report on existing home sales issued yesterday, which had shown a slight dip. At the same time, in China, data were issued showing little growth in factory activity. Economic pressures also are being seen in Europe. By comparison, our trends are quite favorable.

All in all, then, it is a good start for the bulls today. -Harvey S. Katz, CFA

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 The earnings parade continues, and three members of the Dow 30 have reported first-quarter results this morning. Insurer Travelers (TRVFree Travelers Stock Report) and chemicals company DuPont (DDFree DuPont Stock Report) seemed to please investors, and those stocks are trading modestly higher in the premarket as a result. However, Wall Street did not take as kindly to the financials from diversified manufacturer United Technologies (UTXFree United Technologies Stock Report), and that equity is down slightly in pre-market trading. 

Today’s biggest winner appears to be shares of Netflix (NFLX), which are surging ahead of the bell, after the subscription-based media content provider released better-than-expected first-quarter financial metrics, including subscriber growth. The stock of leather goods and accessories retailer Coach (COH) is also up sharply in the premarket, thanks to stronger-than-anticipated March-period results. Other notable stocks making upward moves on earnings news include, chip maker Texas Instruments (TXN), aerospace and defense company Lockheed Martin (LMT), and coal miner Arch (ACI).

On the other hand, shares of air carrier Delta (DAL), diversified manufacturer Ingersoll-Rand (IR), electronics retailer Radio Shack (RSH), and office equipment manufacturer Xerox Corp. (XRX) are all indicating lower openings this morning on earnings news. – 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 - The stock market resumed last week's late rally yesterday following a somewhat hesitant early morning performance brought about, in part, by a modestly disappointing report on existing home sales. That sluggish metric, which pointed to a nominally lower month-to-month showing in demand for existing homes, and a weaker-than-expected earnings report from earth-moving giant and Dow-30 component Caterpillar (CATFree Caterpillar Stock Report) sent the Dow Jones Industrial Average down by some 90 points early in the day, before the late rally in the afternoon. Interestingly, though, in spite of the weaker profit showing, Caterpillar shares rose in price yesterday.

All told, by the close, the 30-stock Dow had erased all of its earlier loss and finished nearly 20 points in the black. In all, the index had turned around by some 110 points from trough to peak. But the Dow trailed the other averages by a considerable margin on a proportionate basis. To wit, the NASDAQ climbed 28 points on the day, or nearly a full percentage point, while the Standard and Poor's 500 Index added seven points, or nearly half a percentage point. The Dow, by comparison, rose just 0.14% on the day.

Helping stocks turn around late yesterday was optimism about earnings, even as the U.S. economy struggles somewhat. And that optimism seems to be justified in many cases. For example, earlier today, Netflix (NFLX) handily beat forecasts for the period and that stock is indicating a notably higher opening this morning. Specifically, Netflix closed yesterday at $174.37 a share, and is trading in the pre-market at better than $216 a share. That stellar showing by the entertainment company is helping to lift sentiment on Wall Street in general. In fact, traders have now bid the S&P futures higher by some six points and the NASDAQ futures up by nearly 20 points.
   
As to other news, Microsoft (MSFTFree Microsoft Stock Report) shares rose nicely yesterday on news that an activist investor had taken a $2 billion position in the software giant and Dow-30 component. And after the market's close today, recently weak Apple (AAPL) will report its quarterly results. That stock, which late last week fell below $400 a share after having traded at $705 within the past year, will be watched closely for how it performs on both the top and the bottom lines. Apple shares will undoubtedly be very active both today and tomorrow whatever the results. Also in earnings news, chemicals giant and Dow component DuPont (DDFree DuPont Stock Report) beat expectations, but that stock is indicating a flattish opening this morning.

As to other news, weak factory data from China has not sparked a selloff in the global markets as has been the case before. Indeed, the European bourses are all moving nicely higher so far today, as are our futures, as we noted above. Meanwhile, we will get additional housing news out this morning when the Commerce Department reports on sales of new residences at 10:00 (EDT). Expectations are that such sales inched forward in March on a consecutive-month basis. It should be noted that expectations had also been for an increase in existing home sales, as well, although, as noted, that metric slipped a bit.

Overall, then, we would expect a nicely higher start to the new day on Wall Street, with earnings and to a lesser extent the economy playing a role as the day unfolds. – Harvey S. Katz  

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