After The Close - The major U.S. equity indexes brushed off a weak start—likely the result of some profit taking—and then once again proceeded on their merry way higher. In the end, the latest showing marked the fifth consecutive winning session on Wall Street. Unlike yesterday, today’s standout performers were the technology, financial, and basic materials stocks (more below). The economic news was light and the earnings reports were reasonable, at best, which did not provide many catalysts today, but that did not deter or even slow the bulls. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index had added 49, 17, and seven points, respectively. Overall, advancing issues led decliners on both the New York Stock Exchange and the NASDAQ—though by a bigger margin on the former.
As noted, technology, which was the only laggard yesterday among the 10 major sectors, rebounded in the latest session. Apple (AAPL) shares rose after falling yesterday. Google (GOOG) stock was also higher. Those two industry stalwarts gave a boost to the overall sector. The stocks of WebMD Health (WBMD) and Sohu.com (SOHU) also performed well, along with many of the semiconductor issues. Meantime, the basic materials group turned in a solid showing, headlined by the precious metals, chemicals diversified, aluminum, and steel stocks. The main catalyst there were data showing a better-than-expected trade surplus for China, including improvements in both imports and exports.
Conversely, it was not a great day for those holding stakes in the defensive-minded sectors. The utilities finished in the red and the consumer staples issues were only up marginally. Within the consumer noncyclical space, the stocks of the beverage makers and the food processors were the biggest laggards.
The news from Corporate America has varied over the last 24 hours. On the positive side, was a very solid quarter from Dow-30 component Walt Disney (DIS - Free Disney Stock Report) after yesterday’s closing bell. The entertainment giant reported a 10% top-line advance and profits also came in better than expected. The stock, however, eased a bit today. Likewise, Whole Foods Market (WFM) reported a recovery in comparable-store sales and raised its full-year profit view. On the flip side, the stock of AOL Inc. (AOL) fell after the online media company posted weaker-than-expected earnings. Meantime, although Electronic Arts (EA) missed earnings expectations for its fiscal fourth quarter, shares of the video game maker rose sharply as the company provided an upbeat full-year forecast and gave additional details on its deal with Walt Disney to produce "Star Wars" games.
Elsewhere, the European bourses also moved higher in the latest session. The main catalysts were an upbeat industrial production report from Germany and better-than-expected trade data for China. Germany’s DAX hit an all-time high and the Stoxx Europe 600 index added 0.6%, to close at its highest level since June, 2008. The major European bourses have been on a nice run of late, with investors reacting positively to the European Central Bank’s decision last week to cut interest rates to a record low 0.5% in an effort to boost the euro zone’s recession-plagued economies. - William G. Ferguson
At the time of this article’s writing the author did not have positions in any of the companies mentioned.
12:15 PM EDT - The stock market got off to a weak start early this morning, but has since recovered and is now pressing higher. At just past noon in New York, the Dow Jones Industrial Average is up 15 points (0.1%); the broader S&P 500 Index is ahead five points (0.3%); and, the tech-heavy NASDAQ, which is leading the pack today, is advancing 14 points (0.4%). Market breadth suggests a positive bias to the session, as advancers are ahead of decliners by a small margin on the NYSE. We should see some improvement in these figures, assuming the market continues to strengthen. Most market sectors are advancing, led higher by the volatile basic materials names. Also, the energy issues are also showing some strength. The gains in these stocks likely reflect higher commodity prices. Specifically, gold is up over 1% today, breaking through the $1,450 area, and crude oil is higher, too, now at $96.20 a barrel in New York. Meanwhile, the utilities are lower, as traders are likely allocating capital to riskier, and potentially more rewarding, stocks.
The S&P 500 Index is now moving higher, for what would be the fifth consecutive session, assuming we close positive today. In addition, it should be noted that the index has had a strong run over the past 15 days, with very few setbacks and that may have some wondering if conditions are getting “overbought”. The VIX is little changed at 12.85.
A decent showing in the markets overseas may be contributing to the rally in the U.S. In Asia, the markets put in a strong session, helped by some favorable trade data in China. The markets in Europe also are having a good day.
There were no notable economic reports in the U.S. this morning. Tomorrow, the employment situation is in the spotlight, as we get a look at weekly initial and continuing jobless claims data.
Meanwhile, the market may be getting a lift from some decent first-quarter earnings reports. Today, we heard from Whole Foods Market (WFM). That issue is trading sharply higher, now over $100 a share, after the fashionable supermarket operator posted better- than-expected results and announced a stock split. Further, Electronic Arts (EA) reported weak figures for the most-recent quarter, but “Wall Street” was optimistic about the guidance.
Actively traded stocks moving up in price today include: J.C. Penny (JCP), Advanced Micro Devices (AMD), and Barrick Gold (ABX). Issues moving down include: Williams Companies (WMB), Symantec (SYMC), and ValueClick (VCLK). – 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 – Dow-30 component Walt Disney (DIS – Free Disney Stock Report), which reported March-period results after the market closed yesterday, will likely be a focal point of today’s trading. The media and entertainment giant delivered solid financials, though its stock is flat ahead of the bell. Although Disney’s results were highly anticipated, shares of Whole Foods Market (WFM) appear to be one of today’s biggest winners, at least in pre-market trading, as the grocer released strong March-interim results, raised its guidance, and announced a two-for-one stock split. Other equities indicating higher openings this morning on earnings news include video game developer Electronic Arts (EA), kidney dialysis services provider DaVita (DVA), drugmaker Onyx Pharmaceuticals (ONXX), energy company Marathon Oil (MRO), IT services provider Cognizant Technology Solutions (CTSH), and automobile manufacturer Toyota (TM).
It was not all good news, however, and shares of online content provider AOL Inc. (AOL), trucking company CH Robinson Worldwide (CHRW), gaming and lottery equipment manufacturer Scientific Games (SGMS), restaurant operator Wendy’s (WEN), and online marketing services company ValueClick (VCLK) and all down in the premarket due to lackluster earnings reports. – 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 - Another day, another record falls--or should we say multiple records, as the latest session saw not only the Dow Jones Industrial Average hit an all-time high, but the Standard and Poor's 500 Index do likewise.
In the process, the 30-stock Dow again soared above 15,000, only this time it managed to end the day's trading atop that lofty level, ending the session at 15,056. The Standard and Poor's Index, meanwhile, closed out the day's festivities further above 1,600, at just under 1,626, while the tech-heavy NASDAQ, weighed down by some weakness in a few tech names, added just four points, but still ended the day less than a handful of points below 3,400. The bears seem to have no traction whatsoever these days, as the stock market continues to push higher, with nary a break.
And encouragingly for the bulls, valuations, while higher than earlier in the bull market, are still not very far out of line, with a price-earnings ratio of 17, or so, against a long-term average of about 15. In fact, given the low-inflation backdrop, it can be argued that valuations are quite reasonable.
In any case, the bulls are clearly triumphant, and there are very few bears of note around these days. Now, is that a bearish sign in itself? That is hard to say, although history does tell us that when everyone is bullish, it is often a time to take some chips off of the table. Are we in such a period now? That, too, is difficult to say. But what is certain is that the fundamentals are reasonably good, notably an accommodative Federal Reserve, the aforementioned low inflation environment (especially if we back out the volatile food and energy components from the mix), solid earnings, and no worse than a neutral economic setting, with stellar gains in housing and a notable recent improvement in job creation in April.
And it isn't just our stock market that is roaring ahead. The bourses on the international stage, from Asia to Europe, are enjoying a bullish run of their own. In just the last 24 hours, for example, Germany's DAX hit an all-time record close, becoming the first nation in Europe to follow our lead, while Japan's Nikkei generated a five-year high.
Behind this global surge have been better data on our shores, most prominently the report, last Friday, of a 165,000 gain in payrolls in April, an apparent easing in Europe's debt crisis, at least for the moment, and an aggressive new monetary policy in Japan. Also, there has now been good news out of China, where that nation is now enjoying growth in both imports and exports.
As to the day ahead, we will once more have no economic news of note to digest, while the flow of earnings is fast drying up now that first-quarter reporting season is largely in the books. And what earnings have been reported have remained largely favorable. Of note, was yesterday's results from entertainment giant and Dow-30 component Walt Disney (DIS – Free Disney Stock Report). That blue chip reported a 32% increase in its quarterly earnings, on growth at its theme parks, gains at ESPN, and better news at its film studio. The stock, up nicely in recent weeks, could now see some modest profit taking at the open today.
As to the U.S. stock market this morning, an early indicated bounce higher in the equity futures has now given way to slight declines, suggesting that the opening could be a nominally weaker one. – Harvey S. Katz
At the time of this article's writing, the author had positions in DIS.