After The Close - It was another productive day for those long equities. Once again, the Dow Jones Industrial Average and the S&P 500 established all-time highs. The NASDAQ, though, was hit by some profit taking in the technology sector, which limited the advance for this tech-heavy index (more below). Much like each of the last few sessions, pushing equities forward was a trio of events, including strong corporate results, accommodative monetary policies both here and abroad, and last week’s better-than-expected report from the U.S. Labor Department on April job creation.
The news from Corporate America was mostly positive, as has been the case for much of the fast-concluding first-quarter earnings season. Shares of Fossil (FOSL) and DirecTV (DTV) jumped after both companies beat expectations at the bottom line. Conversely, First Solar (FSLR) stock fell after the alternative energy company reported earnings that were below the Wall Street consensus. Investors also should note that entertainment giant and Dow-30 component Walt Disney (DIS - Free Disney Stock Report) was scheduled to report its latest quarterly results shortly after today’s market close. Disney shares rose today in anticipation of the report. Thus far, about two-thirds of the S&P 500 companies have surpassed Wall Street earnings estimates. This has played a big role in the recent surge in equities. The top-line figures, however, have not been as impressive.
As noted, there was some profit taking in the technology group today after yesterday’s move higher by the sector. Weighing on the group were subpar showings from a few of the industry heavyweights, including Apple (AAPL), Google (GOOG), and Microsoft (MSFT - Free Microsoft Stock Report). Speaking of Apple, news surfaced today that hedge fund manager David Einhorn has increased his bet on Apple, noting that the iPhone producer took a “major step forward” by issuing debt so it could return cash to investors.
However, the technology group was the lone laggard among the 10 major sectors. Leadership today came from the energy, consumer staples, telecommunications, and financial stocks. Energy stocks were higher despite a pullback in the price of crude oil on the New York Mercantile Exchange. The telecommunications issues got a boost from the aforementioned good earnings report from DirecTV. Within the consumer staples area, shares of Walgreen (WAG), Post Holdings (POST), and Kraft Foods (KRFT) were nicely higher in the latest session.
Meantime, it also was a record-breaking day for the European bourses. Specifically, Germany’s DAX surged to an all-time high, buoyed by recent remarks from European Central Bank (ECB) President Mario Draghi that the Continent’s central bank is ready to take more easing action to support the region's sluggish economy if needed. Our sense is that Mr. Draghi is hoping that additional monetary easing on the part of the lead bank will stimulate the markets and preferably also push down the euro, hoping it will weaken and positively impact the struggling euro-zone economies. Too, most of the companies that have reported on Continent have beaten expectations at the bottom line, but, like most of the results stateside, the outperformance has been against reduced expectations, which set the bar rather low for many of the euro-zone companies coming into the first-quarter reporting season. - 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 EDT - The stock market is putting in a mixed performance today. At just past noon in New York, the Dow Jones Industrial Average is showing some leadership, adding on 47 points (0.3%); the broader S&P 500 Index is also ahead four points (0.3%); but, the technology-heavy NASDAQ, which had been higher earlier this morning, is now off slightly. Nonetheless, market breadth suggests some underlying strength, as advancers are ahead of decliners by roughly 2 to 1 on the NYSE. Furthermore, most of the market sectors are in positive territory, which is a constructive sign. There are gains in the transportation issues again, following a banner showing yesterday. The consumer cyclical names are also well ahead and energy-related stocks are advancing. However, the technology sector is off slightly, as there is some weakness in the software names.
Technically, the S&P 500 Index has managed to remain above the 1,600 mark and today’s move puts the Dow back through 15,000. While encouraging, it remains to be seen if these gains can hold, and even be extended, especially as the first-quarter earnings season winds down. Meanwhile, as we move through the month of May, a period that carries some negative connotations, traders will likely be extra vigilant.
Meantime, investors in the U.S. got some support from the financial markets overseas this morning. Notably, in Asia, Japan’s Nikkei surged 3.5% overnight, possibly on optimism that the Prime Minister will embark on an economic stimulus program. The markets in Europe also are closing out a decent session, helped by a positive economic report from Germany.
Back on our shores, we received no major economic news this morning. Tomorrow is also a light day, with just a weekly crude oil inventory report and mortgage data due out. However, things pick up on Thursday, as we get the weekly initial and continuing jobless claims.
Meanwhile, first-quarter earnings season is still providing traders with some notable news. Today, we heard from Fossil (FOSL). That stock is trading higher, after the watch and accessories maker posted better- than-expected results. Further, EOG Resources (EOG) reported strong metrics, moving that issue higher on the news.
Elsewhere, actively traded stocks moving up in price today include: Alcatel Lucent (ALU), Himax Technologies (HIMX), and Arena Pharmaceuticals (ARNA). Issues moving down include: First Solar (FSLR), Aruba Networks (ARUN), and Research In Motion (BBRY). - 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 are not streaming in at the break-neck speed of a few weeks ago, but they continue to flow at a steady pace, keeping investors on their toes. Some of today’s early winners appear to be fashion accessories designer and retailer Fossil (FOSL), satellite television provider DIRECTV (DTV), energy company Anadarko Petroleum (APC), fitness equipment manufacturer Nautilus (NLS), and engineering and construction company AECOM Technology (ACM). All of those stocks are trading higher ahead of the bell.
Conversely, shares of solar panel manufacturer First Solar (FSLR), petroleum company Forest Oil (FST), brewer Molson Coors (TAP), and media company Discovery Communications (DISCA) 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 continued to push higher yesterday, but did so selectively and not without a major effort. Indeed, for much of the opening session of this week, the market seemed to be running up hill, and by the close, the Dow Jones Industrial Average was still a handful of points into the red. However, the companion Standard and Poor's 500 Index moved up to yet another all-time high, but rose just a scant three points in the process.
But that index will start the new day at 1,618, and is up by a strong 13.4% so far this year. The Dow, meantime, is ahead by 14.2%, while the NASDAQ is chipping in with an increase of 12.4%. Other notable winners thus far in 2013 include the Dow Transportation Index, which is ahead 18.7%, the small-cap Russell 2000, which is a 13.0% winner, and the S&P Mid-cap 400, which is in the plus column by a healthy 14.7%. Even the Dow Utilities, which shed seven points yesterday and have been relative laggards in recent weeks, are up an imposing 15.2% for the year to date.
Helping the stock market so far in 2013 and again yesterday, in our view, is optimism that the global central banks will continue to be supportive on the monetary front. Over here, the Federal Reserve has made it plain that it will retain its aggressive bond-buying program in an effort to fully support the often flagging business expansion. And the same is true in Europe, where some markets are hitting all-time highs, as well, in spite of the fact that recessions abound on the Continent. Indeed, in the latest session Germany's DAX reached a record high. And overnight, Japan's Nikkei, which had been closed yesterday, jumped in a delayed reaction to Friday's fireworks over here stemming from the better employment news issued late last week by our Labor Department.
Meanwhile, on our shores, yesterday's small uptick was helped by strength in the financial stocks, notably Bank of America (BAC – Free BofA Stock Report), which saw its shares rise more than 5%, to close at $12.88. That stock is indicated a bit higher at the open this morning. Also, of note, Arkansas Best (ABFS) shares jumped strongly yesterday after the transportation company reached a tentative deal on a labor contract. The stock surged nearly 40%, in response. On the other hand, beef and chicken processor Tyson Foods (TSN) saw its shares ease by more than 3% on weaker earnings.
Conversely, there was no news of note on the economic front, following a very active five-day stretch last week. The only report of consequence this week is Thursday morning's weekly data issuance on initial and continuing jobless claims. A modest uptick in such filings is the expectation after that metric hit a five-year low last Thursday.
As to earnings news, reporting season is fast winding down, but after the close today, we are due to get results from entertainment stalwart and Dow-30 member Walt Disney (DIS – Free Disney Stock Report). That stock, which reached an all-time high yesterday, is expected to have netted $0.77 a share in the latest quarter. Meantime, results in the current three months figure to get a lift from the box office hit Iron Man 3, which had stellar receipts over the past weekend. Also reporting after the close today is medical supplier McKesson Corp. (MCK), which is forecast to have earned $2.31 a share for the latest period.
Finally, after yesterday's mixed session, the bulls seem to be ready to make some hay this morning, as the S&P 500 Index futures are ahead by three points, while the NASDAQ futures are in the black by seven points.
At the time of this articles writing, the author had positions in DIS.