After The Close - Stocks turned in a choppy session today on mixed earnings news and a rise in tensions over Ukraine. A number of crosscurrents pushed the venerable Dow Jones Industrial Average above and below the 16,500 throughout the day. At the close, the Dow was unchanged, the S&P 500 was three points higher, and the NASDAQ was 21 points to the good.
The morning’s economic news was upbeat on the whole. While this week’s initial unemployment claims rose by a sizable 24,000, some volatility was expected around the Easter holiday.
More up tempo was a report issued by the Commerce Department that durable-goods orders climbed by a greater-than-expected 2.6% in March. A more modest increase had been expected. Particularly encouraging in the data was a rise in demand across all sectors. The report confirmed signs of acceleration in the economy provided by recent reports on industrial production and retail sales.
However, the tone of trading turned cautious after word that Russia’s Defense Minister Sergei Shoigu announced that Russia had commenced military drills along the border with Ukraine. It may seem a bit incongruous that investors are concerned with a small country like Ukraine. But the potential for escalation of the conflict between Russia and the western powers in Europe and the United States—already having cost a number of lives--could end up damaging global trade.
The conflict has already pushed up oil prices to levels they would not otherwise be. Despite a hefty rise in supplies, oil prices in New York rose $0.50 a barrel today, to nearly $102.
Meantime, the deluge of earnings reports from Corporate America continued. Tech icon Apple (AAPL) was in the spotlight after the company last night reported strong earnings, increased the stock-repurchase authorization, and split the shares.
Other stocks that shined today included shares of drilling contractor Diamond Offshore (DO), which reported better-than-expected profits. Shares of Zimmer Holdings (ZMH) also did very well after the orthopedic device maker said it would be acquiring rival Biomet for $13.4 billion. Biomet was taken private in 2007.
There were some laggards today, though. Among Dow-30 components, shares of telecom mainstay Verizon (VZ - Free Verizon Stock Report) and industrial giant 3M (MMM - Free 3M Company Stock Report) eased after results failed to live up to expectations.
The trading week closes tomorrow with another big day of companies reporting first-quarter profits. Developments in Eastern Europe could influence sentiment, as well. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:30 PM EDT - The U.S. stock market opened higher this morning, pulled back sharply, but is now advancing, once again, albeit modestly. Notably, stocks have been quite volatile lately, so the choppiness displayed this morning comes as little surprise to traders. At just past noon in New York, the Dow Jones Industrial Average is up 15 points; the broader S&P 500 Index is ahead five points; and the NASDAQ is tacking on 25 points. Market breadth suggests a slightly positive tone to the session, as advancing stocks are just ahead of decliners on the NYSE, with many market sectors in positive territory. The technology area is making strides, helped by strength in the computer hardware stocks. Too, the high-yielding utilities are moving higher. However, the basic materials issues are lagging, as there is some weakness in the gold mining names.
Technically, equities have staged a substantial runup over the past week. Notably, the S&P 500 Index, and the Dow Industrials have acted quite well. However, we are looking for the NASDAQ, which is still below its 50-day moving average, to firm up. Many of the Internet and biotechnology names had encountered selling over the past several weeks, and it would be constructive to see these issues regain more of their footing.
Traders are likely looking past this morning’s batch of mixed economic reports. Initial jobless claims came in at 329,000 for the week ended April 19th. This figure was higher than last week’s showing, and also slightly less favorable than had been anticipated. On a brighter note, weekly continuing jobless claims showed some improvement. Elsewhere, durable goods orders increased 2.6% for the month of March, surpassing the consensus view. Tomorrow, will be a light day for reports, with just a University of Michigan’s consumer sentiment report due out.
Meanwhile, traders are busy sifting through numerous recently-released earnings reports. Of note, we heard from Apple (AAPL). That issue is trading dramatically higher, after the technology leader released encouraging results, which included news of a stock split and an increased share buyback program. Shares of Facebook (FB) are also moving up after a strong report, albeit just slightly. However, Qualcomm (QCOM) stock is slipping, after that company put out mixed results. - 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 – The earnings parade continues, headlined by the tech sector, most notably Apple (AAPL). The computer and personal electronics giant is seeing its shares move sharply higher ahead of the bell after releasing solid March-period results, increasing its quarterly cash dividend and share-repurchase authorization, and announcing a 7-for-1 stock split, its first since 2005. Other equities indicating higher openings this morning on earnings news include social network operator Facebook (FB), video game developer Zynga (ZNGA), which also announced that its founder, Marc Pincus, will step back even further from day-to-day operations, semiconductor company Texas Instruments (TXN), heavy equipment manufacturer Caterpillar (CAT – Free Caterpillar Stock Report), telecommunications heavyweight Verizon (VZ – Free Verizon Stock Report), airline operator American Airlines (AAL), automaker General Motors (GM), homebuilders D.R. Horton (DHI) and PulteGroup (PHM), cable company Time Warner (TWC), athletic apparel maker Under Armour (UA), and health insurer Aetna (AET). The stock of Zimmer Holdings (ZIMH) is also up sharply in the premarket, after the designer and marketer of orthopedic products announced first-quarter earnings and agreed to purchase industry peer Biomet for $13.35 billion, including debt.
While the news was largely positive, helping to push equity futures higher, investors appeared unimpressed with results and/or outlooks from telecommunications equipment company Qualcomm (QCOM), diversified manufacturer 3M (MMM – Free 3M Stock Report), package delivery giant United Parcel Service (UPS), and restaurant operator Dunkin’ Brands Group (DNKN). Indeed, all of these issues are moving lower ahead of the bell. – 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 on a roll over the past week and a half, recouping large chunks of the losses sustained in late March and early April, pulled back very modestly yesterday, as earnings, which have been better than expected turned more mixed, amid some angst ahead of some critical reports to be issued after the close, including those from such icons and Apple Inc. (AAPL) and Facebook Inc. (FB). See below.
To be sure, the retracement was nominal, for the most part, and rather selective, being particularly apparent on the tech-laden NASDAQ, which surrendered 34 points, and the small-cap Russell 2000, which shed nearly nine points. Interestingly, those two subsets had been among the weakest links when the equity market turned lower late last month, principally over fears of excessive valuations in the biotech, Internet, and social-media-related sectors.
On the other hand, the losses suffered by the other indexes were muted, with the Dow Jones Industrial Average giving back just 13 points and the Standard and Poor's 500 Index easing by four points. The companion S&P Mid-Cap 400 Index eased by about two-and-a-half points. All told, it was a less-than-compelling session for a stock market apparently in need of some breather--at least for one day.
Yesterday, traders were somewhat chagrined by earnings, which, as noted, turned mixed. Also, economic data issued yesterday morning also proved unsettling, especially the metrics on new home sales. This government-issued report showed a double-digit percentage point decline, as sales fell to 384,000 units in March on an annualized basis. That was well off expectations (450,000) homes, February's total (upwardly revised to 449,000 units), and last March's somewhat better total of 443,000 properties. Although we believe this weakness is transitory and will reverse as the spring and summer progress, the falloff is still unsettling. Behind this weakness, we sense, is the continued fallout from higher mortgage rates, the long and costly winter, and some affordability issues among first-time buyers in this volatile housing category.
At the same time, the preliminary reading on the manufacturing purchasing managers' index for April showed some slippage and that, too, was a bit unsettling, as a slight rise had been the consensus expectation. However, it was the earnings parade that was most on the minds of traders and investors, alike, and that wasn't all that compelling. As to the aforementioned twin heavyweights, shares of Apple and Facebook are trading higher following their respective releases, with Apple shares up dramatically on not only better earnings, but an increase in its share buyback and the announcement of a 7-for-1 stock split, its first such distribution since 2005. These high-profile tech stalwarts can have an exaggerated effect on trading. Indeed, it should be noted that both stocks had backtracked somewhat yesterday as results were awaited, and their modest setbacks helped set the lower tone on the NASDAQ.
Looking at today's action, meanwhile, there is another whole slate of earnings reports due out before trading commences in less than an hour from now, with many already having issued their results, with more to follow after the close. It should be noted that the days in which companies typically reported their results during trading, which had been the norm during the 1970s and 1980s--and before that--have gone the way of the dinosaur. As to the markets overseas, stocks in Asia were generally weaker overnight, taking their cue from Wall Street's slippage yesterday, while the bourses in Europe are notably in the black thus far this morning, with the good news from Apple, Facebook, and now Caterpillar (CAT - Free Caterpillar Stock Report) overshadowing some profit misses. Finally, on our shores, the upbeat Apple news is helping to send the NASDAQ futures dramatically higher this morning, with a gain of almost 60 points. The S&P 500 Index futures are gaining a more moderate, but still appreciable, eight points.
Finally, while the focus is mostly on earnings, economic releases continue to make their way across computer screens. And here, the Commerce Department has just reported that orders for durable goods rose by 2.6% in March, which was better than the estimated gain of 2.0% and was the best showing by this volatile series since last November. Breaking the report down, we find that excluding transportation offerings, which are best placed aside given their big ticket nature and, thus distorting tendencies, durable goods orders jumped by 2.0%, their best showing since January of 2013. Meanwhile, non-defense capital goods orders, a key component for those watching capital spending, rose 2.2%. Thus, taken as a whole, this was a uniformly good report and one that should raise hopes for a progressively better economic showing this year. - Harvey S. Katz
At the time of this reports writing, the author did not have positions in any of the companies mentioned.