After The Close - Stocks moved higher today, spurred by a report that weekly initial jobless claims neared a five-year low, but finished well off of their best levels of the session as this morning’s rally faded by late afternoon. The drop in unemployment claims provided fresh reason to believe that a recovery in the job market would cure a lot of the economy’s ills, since consumer spending accounts for by far the largest part of the nation’s gross domestic product (GDP).
At the end of the day, the Dow Jones Industrial Average had tacked on 25 points and the NASDAQ was 20 points to the good. Intraday, the Dow and the NASDAQ had been up as much as 92 points and 31 points, respectively. Market breadth was still highly favorable, with many more stocks rising than one falling on both the Big Board and the NASDAQ.
The number of issues hitting new 52-week also swamped the handful of stocks falling to 52-week lows, too, reflecting not only today’s advance but the market’s strong move over the past year. Indeed, the Dow is within striking distance of its all-time high of 14,888 set earlier this month, and a gain of a little over 2% would put that venerable index over the 15,000 mark.
To get there, stocks may need to find some extra firepower. That could come in the form of a stronger-than-expected report on first-quarter GDP, due out tomorrow morning. Having some big-name companies report better-than-projected earnings might also do the trick.
However, this earnings season is proving somewhat uneven, with many companies besting lowered earnings estimates, but falling short on the revenue line.
As for today’s earnings releases, there was some distinct variation. For instance, Dow-component 3M (MMM - Free 3M Stock Report) reduced its outlook going forward, and its shares suffered as a result. And while Exxon Mobil (XOM - Free Exxon Stock Report), another Dow component, topped profit forecasts, its shares fell when the company reported a production decline.
Elsewhere, shares of Bristol-Myers Squibb (BMY) dropped when the company reported that share net declined more than predicted. The drugmaker is suffering from the loss of patent protection on a number of its medicines.
On the upside, package deliverer UPS (UPS) turned in a strong performance, noting that it enjoyed a busy post-holiday delivery season.
As for tomorrow, the 8:30 a.m. EDT release of government data regarding first-quarter GDP looms large. There is a good chance it could set the early tone for trading on Friday. A fresh batch of earnings news is on tap, as well. -Robert Mitkowski
At the time of this writing, the author did not have any positions in the companies mentioned.
12:30 PM EDT - The stock market got off to a strong start this morning and, so far, has managed to build on those gains into the early afternoon, which is a good indication. Notably, it is also favorable that all three of the major market averages are moving together, which stands in contrast to the more mixed readings we have been seeing lately. As we pass the noon hour in New York (EDT), the Dow Jones Industrial Average is up 65 points (0.4%); the broader S&P 500 Index is ahead 10 points (0.6%); and the NASDAQ, which is showing some leadership, is advancing 26 points (0.8%). There is fairly widespread buying of equities today, as advancers are outnumbering decliners by almost 3 to 1 on the NYSE. As was the case yesterday, we are seeing demand for smaller issues, as the Russell 2000 is up almost 1% today. This is important because it demonstrates that investors are still risk tolerant, namely that they are willing to take positions in the more speculative names.
Also, almost all of the market sectors are advancing today. The basic materials stocks are again putting in a strong showing. The miners are likely benefitting from higher gold prices, which are up over 2%, and crossing through the $1,450 mark. The consumer cyclical stocks are also doing quite well. In contrast, the consumer non cyclical names are off and the utility stocks are not keeping pace with the other sectors, as is often the case in a rising market.
Technically, the S&P 500 Index, now at 1,588, seems to be ready to test its recent high of about 1,597. This will be a critical level, as it measures investors’ commitment to the rally. The VIX is lower today at just over 13.
The economic news released this morning was encouraging. Specifically, initial jobless claims for the week ended April 20th, dipped to 339,000 from the upwardly revised 355,000 claims logged in the prior week. Analysts had been expecting a somewhat higher figure for the current week, so the reading may have come as a welcome surprise. Moreover, continuing claims levels also headed lower.
Finally, investors are likely looking hard at corporate earnings reports. Today, Dow component 3M (MMM – Free 3M Stock Report) put out a disappointing release and that issue is trading lower. Elsewhere, Cliffs Natural Resources (CLF) is seeing its stock move up strongly after the basic materials company put out a better-than-expected report. -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 – Earnings reports continue to flow out at a furious pace today, keeping investors on their toes. Two of the day’s most watched releases are from Dow-30 components: energy giant Exxon Mobil (XOM – Free Exxon Stock Report) and diversified manufacturer 3M (MMM – Free 3M Stock Report). Exxon delivered solid earnings, but its stock is down slightly in the premarket. Shares of 3M are indicating an even steeper decline when trading commences, after the company reported lackluster first-quarter financials and trimmed its guidance.
Other notable stocks moving lower on earnings news include online videogame developer Zynga (ZNGA), telecommunications equipment company Qualcomm (QCOM), drugmaker Bristol-Myers Squibb (BMY), and cable services provider Time Warner (TWC).
It was not all bad news, however, and shares of confectioner Hershey (HSY), mining company Cliffs Natural Resources (CLF), restaurant operator The Cheesecake Factory (CAKE), chemicals company Dow (DOW), package delivery powerhouse United Parcel Service (UPS), and Akamai Technologies (AKAM), which provides services for delivering content over the Internet, are all up ahead of the bell. – 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 turned in a fairly good performance yesterday, at least aside from the Dow Jones Industrial Average, which fell by 43 points, after a pair of earnings reports by two members of that 30-stock index failed to ignite a further rally in the blue chips.
Specifically, we saw less-than-compelling quarterly results and forecasts from such long-time Dow components as AT&T (T – Free AT&T Stock Report), the telecom giant, and household products behemoth Procter & Gamble (PG – Free P&G Stock Report). Telephone shares eased by 5%, while Procter & Gamble suffered a 6% drop.
Elsewhere, results were incrementally better, as the NASDAQ and the Standard and Poor's 500 Index were essentially flat, eking out the most nominal of gains, while the small- and mid-cap composite did rather well, which would explain the nice plurality of gaining stocks over losing issues on both the Big Board and the NASDAQ in the latest session. Most mutual funds also recorded gains, which explains our initial assessment that the most recent session was a fairly good one.
And it is a good thing that earnings results generally have been satisfying investors, as the economic metrics have been anything but upbeat recently. To wit, the latest session saw the release of data from the Commerce Department showing a sizable decline in orders for durable goods in March, with that survey noting a nearly 6% decline in that volatile metric. A 2.9% drop in that index had been the general assumption.
As to other news, earnings at tech icon Apple Inc. (AAPL) failed to inspire investors, and that recently weak performer eased slightly in the latest session. All told, Apple shares have tumbled from $705 to yesterday's close of $405. In recent days, that issue had fallen below the $400-a-share level.
Meanwhile, in addition to these high-profile names, we also saw earnings issued from a key basic materials player, as Cliffs Natural Resources (CLF) reported its latest quarterly results after the market had closed. That stock, which has been just about the worst performer on the Big Board over the past year, came out, as expected, with a sharp decline in its earnings. However, the falloff was not as steep as forecast, and the stock, which rose nicely yesterday in anticipation of its quarterly issuance, is indicating a notably higher opening when trading commences this morning. In all, that issue, which closed at $18.22 a share yesterday, is suggesting an opening this morning just north of $19.80 a share. Other basic materials stocks did well yesterday, too, in a reversal of recent form.
Finally, in other news, the government just reported that weekly jobless claims, a closely watched survey, fell by 16,000, to 339,000 in the week ended April 20th. Expectations had been for a 350,000 reading. That better result, along with a sharp drop in continuing claims in the latest week, has given the equity futures, which were already up nicely, a further lift. All told, the S&P 500 futures are now ahead by seven points and the NASADAQ futures are better by 19 points. So a strong opening is expected when traders get down to business in less than an hour from now.
At the time of this article's writing, the author had positions in T.