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After The Close - The major U.S. equity indexes traded in a tight band around the neutral line throughout today’s session. The lack of any noteworthy economic and earnings news did not give investors much to work with and was probably the biggest reason why no significant moves were made in either direction. After a slow start to the trading day, buying picked up, but then eventually gave way to some selective profit taking in the second half of the day. Overall, it was a mixed session. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index all finished the session nominally lower, while the mid- and small-cap stocks were able to eke out diminutive gains. Advancing issues narrowly led decliners on both the Big Board and the NASDAQ. Our sense is the selective late-day selloff in the major U.S. indexes was driven by comments from one of the Federal Reserve’s District Presidents (more below).

From a sector perspective, there was a clear indication as to what traders were thinking. Those sectors most closely tied to the performance of the global economy, including the energy, industrial, and basic materials groups, fared well. Likely helping there were reports that China’s government will implement new measures to jump start the country’s slowing economy. (Asia’s major equity indexes finished higher overnight). Conversely, those sectors considered defensive in nature did not perform well, with the consumer staples stocks suffering the most notable losses. In the consumer noncyclical space, shares of Campbell Soup (CPB), Safeway (SWY), and Dean Foods (DF) finished in the red.

As noted, the event that the seemed to have the biggest impact on trading today was comments by Federal Reserve Bank of Chicago President Charles Evans. The district leader who is a voting member of the Federal Open Market Committee said the U.S. economy has improved “quite a lot” as the central bank maintains record stimulus. Some investors took the dovish remarks as a sign that the central bank may revisit talks about taking the “foot off the pedal” with regards to accommodative monetary policy in the near future, which is often not viewed favorably by market participants. These comments come a few days ahead of remarks from Federal Reserve Chairman Ben Bernanke and the release of minutes from the latest FOMC meeting. At that time, further clarity about what the lead bank is thinking should be made known. 

Meantime, on a slow day for earnings and economic news, we did get some merger and acquisition news from Corporate America. This morning, we learned that Yahoo! (YHOO) was buying Tumblr, Vista Equity Partners has agreed to purchase Websense (WBSN), and Actavis (ACT) is planning to buy Warner Chilcott (WCRX). Rumors about the latter deal had surfaced last week.

Looking ahead to tomorrow, it will be another light day on the economic beat. On the earnings front, all eyes will be focused on home supplies retailer The Home Depot (HD - Free Home Depot Stock Report), which is scheduled to release its latest quarterly results before the U.S. equity market opens. The Home Depot report will be used as another gauge on how the consumer is faring. In recent weeks, the consumer confidence and sentiment data have been encouraging. That, along with slowly improving job creation numbers, has had a positive effect on trading over the last fortnight.   - William G. Ferguson

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

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12:30 PM EDT - The stock market got off to a somewhat weak start this morning, but has since made a move into positive territory. Ultimately, a flurry of merger and acquisition news may have traders feeling a bit more bullish today. In technology Yahoo! (YHOO) shares are up slightly, after the Internet company announced that it would be buying social media operator Tumblr. Also, Websense (WBSN) shares are surging on news that the company will be taken private. Meanwhile, in the drug area, Actavis (ACT) is seeing its stock move higher, after agreeing to acquire rival drug maker Warner Chilcott (WCRX) in an all stock transaction.

At just past noon in New York, the Dow Jones Industrial Average is up 27 points (0.2%); the broader S&P 500 Index is ahead by four points (0.2%); and the tech-heavy NASDAQ is tacking on five points (0.1%). Market breadth is now favorable, with advancing stocks outnumbering decliners by a decent margin on the NYSE. Most of the market sectors are heading higher, with leadership in the energy, consumer cyclical, and technology stocks. In contrast, the consumer non-cyclical names and the healthcare issues are off slightly today.

Technically, the S&P 500 Index continues its advance, with no real interruption. Since the last minor correction in late April, the broad-based index has climbed almost 8%. Furthermore, this comes on top of the sizable gains logged during the first quarter this year. Trading volumes have picked up a bit in the past few sessions, and greater participation in the rally would signal added conviction. The VIX was higher this morning, but has since come down a bit, to just below 13.

Meanwhile, there were no economic reports released this morning, and tomorrow will be a quiet day, too. However, on Wednesday, the Federal Reserve will be in the spotlight, as Chairman Bernanke provides his views to a Congressional committee, and minutes from the FOMC’s May meeting are released later in the day. Notably, there has been some concern among traders that the Fed’s asset purchase program may come to a slowdown. This could have some traders exercising caution in the earlier part of this week. Elsewhere, existing home sales for the month of April are also set to be released on Wednesday, and many will want to see that the recovery in the housing market is still on track, as we think will be the case.  - 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 There was a bit of M&A activity over the weekend. First, in a deal that investors already knew was in the works, leading generic drugmaker Actavis (ACT) agreed to acquire industry peer Warner Chilcott (WCRX) through a stock swap that values the pharmaceutical company at approximately $8.5 billion. Both stocks are trading slightly higher in the premarket as a result. Elsewhere, consulting company Accenture (ACN) has struck a deal to purchase digital marketing outfit Acquity Group for about $316 million in cash. Finally, Internet company Yahoo! (YHOO) has agreed to buy Tumblr, the popular blogging Website, for $1.1 billion. Tumblr will be independently operated as a separate business, and shares of Yahoo! are indicating a marginally lower opening this morning.

Earnings news, on the other hand, is quite light, though packaged foods company Campbell Soup (CPB) did report better-than-expected April-period financials. The stock is up modestly ahead of the bell as a result. – 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 - And the beat goes on. Specifically, the formidable bull market, which is now more than four years old, continues unabated. In fact, in some ways, this aging uptrend is stronger than ever, and more resilient.

To wit, following a succession of weeks in which the chief economic metrics have been anything but compelling and following just a so-so earnings reporting season, the stock market is continuing to hit all-time highs, with last Friday's stealth 121-point surge in the Dow Jones Industrial Average being only the latest in a string of superb performances by the U.S. equity market. And, of course, the Dow was not alone, as the NASDAQ added 34 points, or nearly a full percentage point, while the Standard and Poor's 500 Index jumped an even 17 points, or just over 1.0%. The smaller-cap indexes also fared well in an all-encompassing rally in what must honestly be termed a materially overbought market.

To be sure, Friday's market was helped by some rare outperformances by the domestic economy, with the University of Michigan's closely watched Consumer Sentiment Index rising more than expected, just as the Conference Board's Index of Leading Indicators did in a report issued a few minutes later. In recent weeks, most of the data have been less welcoming, to say the least, with even housing starts backtracking in April. Indeed, even with Friday's rare strength on the economic front, it is very likely that the nation's gross domestic product, a 2.5% gainer in the opening quarter, will increase by less than 2% in the current three months.

Now, a new week dawns and the markets are moving higher across the sea in both Europe and parts of Asia. Encouraging the bulls is the perception that perhaps global growth will be better than generally forecast. That is clearly not certain at this point, with most reports showing additional deterioration in Europe. Just last week, for example, reports showed that France's economy had entered a recession, while Germany's backdrop was barely expansionary.

As for the week ahead, it should be a quiet start to the upcoming five-day stretch, at least on the economic front, with no business releases of note either today or tomorrow. However, on Wednesday, the National Association of Realtors is scheduled to issue its monthly report on sales of existing homes. A small gain is the forecast for April. Then on Thursday, the Commerce Department will weigh in with data on sales of new residences. Here, a solid gain is the forecast. It seems as though the housing sector, down so long and so far, is springing back to life in an increasingly big way. It may not be fully alone in this regard, but it is clear that this sector is now in the lead among the key parts of the economy.

Also, on Thursday, the Labor Department will issue data on weekly and continuing jobless claims, while Friday will bring a survey on durable goods orders from the Commerce Department. A small increase is the expectation.

As to earnings, there will be a number of reporting companies, principally those with April-ending periods. Here, we are due to get results from a pair of Dow Components, specifically Home Depot (HDFree Home Depot Stock Report) tomorrow and Hewlett Packard (HPQFree Hewlett Packard Stock Report) on Wednesday. Other big names reporting this week include Medtronic (MDT) and Lowe's Cos. (LOW), the big competitor to Home Depot.

Finally, in other news, generic drug maker Actavis, Inc. (ACT), which has been the subject of takeover rumors of its own, has struck a deal to acquire specialty pharmaceuticals company Warner Chilcott (WCRX) for $8.5 billion in stock. Both stocks are gaining in the pre-market so far today.

Such goings on, though, are not yet lighting a fire under the bulls, as the U.S. equity futures are suggesting a modestly lower opening at the start of the trading day in about a half hour from now. – Harvey S. Katz

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