After The Close - Stocks marched higher again today, with the Dow Jones Industrial Average tacking on 78 points, to close at an all-time high, if off its best levels of the session. The tech-heavy NASDAQ only barely finished the day higher, though. Still, market breadth was strong, with about two stocks rising for every one falling on the New York Stock Exchange.
It helped that Wall Street was in a good mood after Federal Reserve Chairman Ben Bernanke’s testimony before Congress yesterday indicated that the central bank would continue to provide strong support for the economy.
As for the day’s business news, the tone was modestly upbeat, on balance, with falling initial unemployment claims seemingly outweighing a neutral reading on the nation’s leading economic indicators.
The star performer among Dow stocks was UnitedHealth Group (UNH - Free United Health Stock Report), which posted quarterly earnings well above expectations and boosted its guidance for all of 2013. Solid membership gains and cost controls supported results.
Among the stock market’s various sectors, shares of financial companies fared especially well in today’s session. Bank of America (BAC -Free Bank of America Stock Report) stock rose to a 52-week high. Yesterday, the company turned in impressive June-quarter profits. B of A’s long-term recovery appears to be on track, as well. Shares of Morgan Stanley (MS) also moved higher in a strong banking group.
A number of energy stocks climbed, as well, spurred by rising oil prices. Government data released on Wednesday showed another big drop in domestic inventories. Over the past three weeks, inventories have declined sharply, eliminating a big surplus. Current supplies remain near the high end of their five-year average, though. The rise in oil prices notably benefited the shares of Brazil’s Petrobras (PBR). Oilfield services stocks, such as Halliburton (HAL) also participated in the rally. However, shares of petroleum refiners, such as Tesoro (TSO), struggled with the prospect of the higher cost of crude oil.
On the down side, Sherwin-Williams (SHW) stock tumbled when the Cleveland-based paint manufacturer offered up a third-quarter forecast that fell short of expectations and indicated that an acquisition in Mexico had been denied by the authorities there.
Tomorrow brings another big day of corporate profit reports. Oilfield services giants Baker Hughes (BHI) and Schlumberger (SLB); conglomerate General Electric (GE - Free General Electric Stock Report); industrial powerhouse Honeywell (HON); and apparel supplier V.F. Corp. (VFC) are all due to release their second-quarter results on Friday. Trading may also be influenced by reports from Google (GOOG) and Microsoft (MSFT - Free Microsoft Stock Report) scheduled to be issued after today’s close. -Robert Mitkowski
At the time of this writing, the author did not have a position in any of the companies mentioned.
12:15 PM EDT - The U.S. stock market is making notable progress today. At just past noon in New York, the Dow Jones Industrial Average is up 105 points (0.7%); the S&P 500 Index is ahead 11 points (0.6%); and the tech-heavy NASDAQ is adding on 11 points (0.3%). Market breadth confirms the widespread accumulation of equities today, as advancing issues are ahead of decliners by almost 3 to 1 on the NYSE. There is notable leadership in the financial issues, as some of the big names in this group have been logging good quarterly results. The energy sector is also advancing nicely. Notably, the price of crude oil is up about 1% to $107 a barrel. Nonetheless, there is some weakness in telecommunications and technology names. The Semiconductor Index is off today, and that is dragging related companies and the overall sector down.
Technically, the major averages are all showing strength, as they are at, or near, 52-week high ground. Demand for equities is strong, given the right combination of a recovering economy, strong corporate profits, a relatively benign inflation outlook, and the idea that an accommodative stance will be taken by the Fed, at least for a while. No doubt, the second-quarter earnings season looks encouraging, and it will remain to be seen if the market can sustain its move higher once things calm down. Investors are likely feeling a bit better today, as the VIX is lower to about 13.5.
Today’s economic news has been constructive. The employment situation truly looks to be improving. Initial jobless claims for the week ended July 13th, came in at 334,000, which was down from the prior week’s reading and also better than many had expected. The weekly continuing claims figures were a bit less favorable, though. Further, we received a healthy report from the Philadelphia Fed on the economy in that region of the country. In contrast, the Conference Board’s report of leading indicators for June was a bit lackluster.
Some stocks reported results recently. We heard from Intel (INTC – Free Intel Stock Report). Those shares are trading lower, after the tech giant tempered its outlook. International Business Machines (IBM – Free IBM Stock Report) shares are getting a lift, as that company’s profits were impressive. An in the financial sector, Morgan Stanley (MS) stock is moving sharply higher, on a decent release, as well. - 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 – We are now in the thick of earnings season, and investors are digesting a slew of reports from bellwether Dow-30 components. Shares of financial services provider American Express (AXP – Free American Express Stock Report) are down slightly ahead of the bell. Earnings were better than expected, but revenues missed the mark. Investors were not as concerned with International Business Machines’ (IBM – Free IBM Stock Report) top line, however, even though it declined for the fifth straight quarter. Solid earnings and an upbeat outlook caused traders to bid shares of the supplier of mainframe computers, software, and services up moderately ahead of the bell. Second-quarter financials from health insurer UnitedHealth Group (UNH – Free UnitedHealth Group Stock Report) also garnered a warm reception, and the equity is higher in pre-market trading. On the other hand, shares of chip manufacturer Intel (INTC – Free Intel Stock Report) and telecom Verizon Communications (VZ – Free Verizon Stock Report) are indicating lower openings this morning on earnings news.
Other stocks moving down ahead of the bell after reporting earnings include online auctioneer eBay Inc. (EBAY), tobacco company Philip Morris International (PM), mobile phone developer Nokia (NOK), paint manufacturer and retailer Sherwin-Williams (SHW), and railroad Union Pacific (UP). It’s not all bad news, however, and shares of investment bank Morgan Stanley (MS), flash storage designer and manufacturer SanDisk (SNDK), semiconductor company Cypress (CY), software developer Check Point (CHKP), and alternative asset manager The Blackstone Group (BX) are all up in the premarket. – 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, which has been generally expecting the Federal Reserve to begin tapering its bond-buying efforts by yearend and continuing its accommodative monetary efforts in other ways--notably keeping short-term interest rates at current historically low levels for the foreseeable future--had those expectations reaffirmed by the lead bank's Chairman Ben S. Bernanke in testimony before Congress yesterday.
Chairman Bernanke's lack of overt surprises in either his prepared text or his subsequent comments had been widely expected, as we had suggested yesterday, and the calm reaction of the financial markets would seem to bear this out. Such a matter-of-fact showing, moreover, was in stark contrast to the experience in mid-June, when his intonations about a Fed tapering had generated a sharp selloff in equities, with the Dow Jones Industrial Average losing 560 points in two days. His calming subsequent explanation of his position then helped to reassure the markets leading to a quick recovery in the major averages, which persist up to this point.
Meanwhile, the Fed still has an outsized influence on market behavior, as Mr. Bernanke's comments and the issuance of the Beige Book commentary on the economic outlook later in the day could have led to some notable gyrations in equity prices. However, as no deviations of note were forthcoming, stocks spent the day in an uncharacteristically narrow band, with the Dow largely moving back and forth within a range of some 60 points. The other averages likewise held close to their starting points, although in the end, the principal indexes did manage to retain a positive bias.
Of course, it wasn't just about the Fed; there was also a succession of profit reports to digest, as second-quarter reporting season kicked into high gear with a key bottom-line issuance from banking giant Bank of America (BAC - Free Bank of America Stock Report). That Dow component easily beat expectations, and the stock after some initial hesitation, moved nicely higher on the day, hitting a new 52-week high in the process.
Then, after the close, a trio of Dow stocks issued their results, as American Express (AXP - Free American Express Stock Report), International Business Machines (IBM - Free IBM Stock Report), and Intel (INTC - Free Intel Stock Report) issued their second-quarter statements. The initial reaction was mixed, with IBM at first jumping by some three percent. However, this morning that presumptive advance at the open has been pared back somewhat. On the other hand, shares of both American Express (which reported higher net) and Intel (which posted an expected profit decline) are suggesting moderately lower openings on some apparent disappointment. Online auctioneer eBay, Inc. (EBAY), however, is indicating a notably lower start on a disappointing showing.
As to the markets in general, there has been little of note to report form the overseas arena thus far today, with most markets in Asia showing a mixed pattern in overnight dealings, while the major European bourses have reversed earlier losses and are moving ever so slightly into the black. And on our shores, a mixed opening is suggested, with the S&P 500 Index edging incrementally into the black, while the NASDAQ futures are pointing to a narrowly lower opening when trading commences in less than a half hour from now.
Finally, while the Federal Reserve and Corporate America are grabbing the lion's share of the headlines these days, and with good reason, the stock market also is being influenced by the latest action in the economy. Of late, most reports have been close to target and few notable reactions have ensued. However, yesterday produced a major deviation and a big surprise, as the housing market, a mainstay of the continuing business expansion, was dealt a major blow, as housing starts, the pre-eminent metric in this sector, came in well below expectations, falling nearly 10% in June. A modest gain had been the forecast. Building permits also fell rather sharply. The market didn't react much, though, as some reasoned that the weaker trend in housing could keep the Fed from abandoning its bond buying all that quickly. We'll see.
Overall, though, with earnings continuing to come out fast and furious, we sense that the doings in Corporate America will, for now, at least, be grabbing most of the headlines over the next fortnight--or until the July jobs report is issued two weeks from tomorrow. - Harvey S. Katz
At the time of this article's writing, the author has positions in Intel.