After The Close - Investors took a timeout today ahead of tomorrow’s big monthly government payroll report. At the close, the Dow Jones Industrial Average was down less than one point, after being deeper in the red most of the day, but the NASDAQ shed 39 points, although the tech-laden index had earlier posted even sharper losses. Market breadth was negative, with the number of declining issues outpacing those advancing by about three to two on the New York Stock Exchange.
Today’s trading seemed to show that the markets need positive reinforcement. Many of the major indexes are at, or near, all-time highs, but likely need a boost from favorable news on the economy or indications that corporate profits are meeting expectations to notch significant further gains. Since earnings season is not yet under way, the nearest milepost is Friday’s jobs report, with much of Wall Street in a wait-and-see mode in the latest session.
Among the stocks feeling the selling pressure the most were highflyers in the technology and healthcare-biotech sectors. Those included Facebook (FB), Twitter (TWTR), Amazon.com (AMZN), Celgene (CELG), and Biogen IDEC (BIIB), the shares of which have put up sizable gains in the past year—making them vulnerable to a correction.
In company news, Anadarko Petroleum (APC) settled a lawsuit related to a previous acquisition for $5.2 billion. Investors liked the fact that the litigation is now in the rear-view mirror and bid up shares of the driller notably.
Another winner was the stock of RPM International (RPM), after the specialty chemicals manufacturer reported improved profits in its fiscal third quarter and raised its full-year earnings outlook. However, the maker of retail products, such as Rust-Oleum, did note some weakness in its consumer business, owing to poor weather.
On the downside, shares of Citigroup (C) fell after an analyst report took a dimmer view of the big bank’s prospects for earnings. Citigroup last week failed to get the Federal Reserve to approve its capital plan, a source of embarrassment for the company. Sentiment toward the stock has also taken a hit after allegations of money laundering at its Mexican affiliate.
Also trading down sharply was the stock of Barnes & Noble (BKS), after word that Liberty Media (LMCA) is selling most of its stake in the bookseller.
Tomorrow morning brings the aforementioned high-profile monthly government employment report, in which about 205,000 jobs were expected to have been created in March. The news is due to hit the wire at 8:30 EDT. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:15 PM EDT - The U.S. stock market opened higher this morning, but has since taken a downward turn. It should be noted that stocks have put in an impressive performance over the past few days, and some pause is likely in order, especially given that a key economic release (the monthly employment report) is due out tomorrow. At just past noon in New York, the Dow Jones Industrial Average is off seven points; the broader S&P 500 Index is down three points; and the NASDAQ is lower by 25 points. Market breadth suggests underlying weakness to the session, as decliners are outnumbering advancers by about two to one on the NYSE. Furthermore, most market sectors are now in negative territory. There is pronounced weakness in the healthcare group, as the biotechnology issues are again encountering selling. The financials are also leading the market lower, as the bank stocks are declining. In contrast, the energy group is up today, thanks to gains in the exploration and production names.
Technically, a bout of buying over the past few days has put the S&P 500 Index in record high ground. That move was accompanied by healthy trading volumes, which was encouraging, too. From here, traders will have to mount a concerted campaign to extend these gains, and a catalyst may be needed. For one, the first-quarter earnings season is approaching, and many investors will be looking closely at the results. The adverse weather that occurred in the winter months may play a role, and figures may vary from expectations. Importantly, the guidance for the remainder of the year will be of paramount importance.
Traders received a few weak economic reports this morning, and that may have added a sense of caution to the session. Initial jobless claims came in at 326,000 for the week ended March 29th. This figure was higher than many had expected, and also above the prior week’s reading. The weekly continuing claims looked a bit better. Elsewhere, the nation’s trade gap widened to $42. 3 billion in February, where many had looked for it to remain unchanged or decline slightly. Further, the ISM Services Index for March was better, but still disappointing. So, combined, the day’s news has likely done little to inspire another rally.There were few notable earnings reports issued out this morning. And, after the close, we will hear from Micron (MU). - 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 – Corporate news is rather light this morning, as we are still a week, or more, from first-quarter earnings season. However, there are a few reports out today that warrant attention. Investors appeared pleased with January-period financials from Perry Ellis (PERY), although preliminary figures were released back in February. Indeed, the stock is up modestly ahead of the bell, as a result. The same was true for February-interim results from leading cement producer Texas Industries (TXI), and that stock is up slightly in pre-market trading, in response. It will likely trade within a fairly narrow band, however, due to Texas Industries’ pending deal to be acquired by industry peer Martin Marietta Materials (MLM). The biggest surprise came from CACI International (CACI), a provider of IT services, primarily for the U.S Government’s defense, intelligence, and homeland security operations. The company cut its guidance due to delays in new contract awards and less government spending, and the equity is down notably in the premarket, as a result. Finally, Internet giant Google’s (GOOG) long-awaited stock split is set to go into effect today. The transaction is somewhat complex, and will result in two classes of shares, A and C. – 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 - April may be the "cruelest month," if we pay heed to the poet T.S. Eliot, who claimed that to be so in his 1922 work, The Waste Land, but if we check with the bulls on Wall Street, they would disagree, at least to this point in the fourth month of 2014.
That is because after a strong market performance to start the month on Tuesday, when the Dow Jones Industrial Average had gained 135 points, the bulls came back with a more muted gain yesterday. Once more, apparent contentment that Fed Chair Janet Yellen is not about to end the era of record low interest rates anytime soon, and some additional comforting economic metrics were a formidable one-two punch for those market optimists in the latest session. On point, after Automatic Data Processing (ADP) had chimed in before the market opened with its monthly survey showing that private-sector job creation was quite healthy, at 191,000 in March. That was well ahead of the February tally, and it was the best showing in three months. Then, at 10:00 AM (EDT), an issuance came out from the U.S. Department of Commerce showing that factory orders had increased by 1.6% in February, the latest month for which such data are available. That gain reversed back-to-back declines in December and January.
Armed with these metrics and optimism about the releases over the balance of the week, Wall Street started the latest session to the upside. Solid gains overseas on Tuesday night and yesterday morning did not hurt either, and the Dow jumped out to an early gain of almost 40 points, and later built this advance to a session high of some 55 points. That gain came amidst some selective slippage in the tech sector, as the NASDAQ wove in and out of positive territory during the session. On the whole, group moves were small, with the more speculative sectors doing slightly better, on average. Meanwhile, even these unprepossessing gains during the session allowed the Standard and Poor's 500 Index to record yet one more intraday all-time high, with that composite climbing to just past 1,893. The Dow also made some notable strides, and that blue-chip composite came within a whisker of an all-time record.
By the close, meantime, the Dow was up 40 points; the S&P 500 Index was ahead five points; and the NASDAQ, reflecting some tech weakness, ended the session up just eight points. Moves were generally modest, but there was strength in the basic materials area, with the mining stocks making nifty gains. Conversely, the fertilizer issues fared rather poorly on some disappointment over the latest quarterly profit indications at Agrium Inc. (AGU). That stock pulled back modestly, after paring a more substantial early session decline. Interestingly, shares of carmaker General Motors, which has been criticized for its handling of a massive recall linked to an ignition defect, rose better than 1% during the day to close at just under $35 a share.
Amidst these crosscurrents, the stock market has had a good week so far, as those long equities have seen higher prices during the three days just ended, and the leading averages, as noted, are near either their best levels ever, or, in the case of the NASDAQ, the peak for 2014. Even that composite is now within some 800 points of matching the peak posted in the ballyhoo days of 2000.
Now, we look ahead to a new day on Wall Street, and as we do so, we note that the markets in Asia were higher overnight after China's announcement of stimulus measures to help its economy, while stocks are moving a bit lower so far this morning in Europe, after the ECB decided to make no change in interest rates. As to our futures, the current trends suggest that the third day of this month will start out slightly to the downside, when trading commences in less than an hour from now.
As to possible influences, as we await the start of first-quarter earnings season, which will commence in about a week to ten days from now, we find that the government has just reported that the nation's trade gap widened surprisingly in February, with the deficit coming in at $42.3 billion. That represented an increase of 7.7%. Expectations had been for a trade gap of $39.7 billion. At the same time, the Labor Department reported a bigger rise than expected in weekly jobless claims.
Finally, at 10:00 (EDT) this morning, the Institute for Supply Management is scheduled to issue its monthly reading (for March) on nonmanufacturing activity. A modest uptick from February is the expectation for the critical services sector. On Tuesday, this trade group, which is domiciled in Arizona, reported an increase in its survey on manufacturing. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.