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After The Close - The final trading week of May, a month that has historically not been kind to investors, got off to a strong start. Helping equities was another round of encouraging economic news (more below) and the lack of many attractive alternative investments to stocks, which has been the case throughout the bull run on Wall Street. All told, the S&P 500 Index finished above the 1,900 for the second consecutive session, hitting a new intra-day high in the process; the Dow Jones Industrial Average, on the strength of the financials finished within a stone’s throw of its all-time high; and the tech-dominated NASDAQ put in another strong showing. Overall, advancing issues led decliners on both the Big Board and the NASDAQ, in a session where volatility and volume was low.

From a sector perspective, it was mostly up arrows among the 10 major groups. Leadership came from aforementioned financial stocks, as well as from the technology and industrial issues. Some encouraging news from the business beat gave a nice boost to some of the more economically sensitive areas. Within the technology space, the stocks of the semiconductor and the computer hardware makers were the big winners.  It should also be noted that the Dow Transports finished above the 8,000 for the first time today. However, it was not all smiles for those long equities, as the basic materials, energy, and telecommunications stocks were out of favor.

There is clearly a greater appetite for risk these days. We think the prevailing sentiment that Federal Reserve is going to keep its accommodative monetary policies in place, at the very least with regard to near-zero short-term interest rates, is driving equities higher once again. Investors though should note that the last time the S&P Volatility Index (or VIX), also known as the “fear gauge,” traded at a level similar to its current reading was in early 2007.

As noted, today brought another batch of encouraging economic data on the heels of last week’s positive reports on new and existing home sales. Housing was once again in the news, as the 20-city S&P Case-Shiller home price index climbed 1.2% in March, which exceeded the expectation of a 0.7% month-to-month rise. This morning’s reports on durable goods orders and consumer confidence also made for pleasant readings. Specifically, orders for durable goods rose by 0.8% last month, versus the expectation of a 0.7% decline, while the consumer confidence index improved this month to 83.0 after falling to 81.7 in April. Investors should not that we will receive two more important snapshots of the U.S. economy this week with the issuance of data on first-quarter GDP (first revision) on Thursday and personal income and spending on Friday.

The news from the corporate world was dominated by mergers and acquisitions. Drug making giant Pfizer (PFE - Free Pfizer Stock Report) pulled its $120 billion offer to acquire industry peer AstraZeneca (AZN) and the stocks of the two drug companies moved in opposite directions on the report.  Meantime, meat processor Pilgrim’s Pride (PPC) offered to buy industry counterpart Hillshire Brands (HSH) for $6.4 billion. Pilgrim’s Pride feels that it offer for Hillshire would be much better than the latter company’s recently agreed upon deal to acquire Pinnacle Foods (PF). If Pilgrim’s Pride was successful in its attempt to buy Hillshire, it would then look to torpedo the deal between Hillshire and Pinnacle Foods. Pinnacle Foods stock fell today, while shares of Hillshire rose sharply. - 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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12:25 PM EDT - The U.S. stock market is moving higher today, as traders return from a three-day holiday weekend. At just past noon in New York, the Dow Jones Industrial Average is up 63 points; the broader S&P 500 Index is ahead nine points; and the NASDAQ is advancing 36 points. Moreover, the Russell 2000 Index is up 14 points, or almost 1.5%, and this suggests that traders are feeling a bit more risk oriented. Market breadth indicates a favorable bias today, as advancing stocks are ahead of decliners by over two to one on the NYSE. There is clear leadership in the financials. The technology names are also making strides. However, the energy issues are quite weak, and slightly lower crude oil prices may not be helping these names.

Technically, the S&P 500, now at 1,909, is at a record high. The Dow Jones Industrial Average is not far behind. Also, the NASDAQ, which had been a bit lagging for some time, is also firming up. Notably, the technology-heavy index is above its 50-day moving average, which is a key level for technicians. Meanwhile, it should be noted that trading volumes remain light, and it would be helpful to see a greater level of participation.

Traders received some encouraging economic news this morning. Specifically, durable goods orders increased 0.8% in April, while economists had expected a decline during the month. Further, the housing market seems to be making progress. The Case-Shiller Home Price Index rose 12.4% in March, which was better than had been anticipated. Too, the Consumer Confidence Index came in with a reading of 83.0 in May, which was up from the April showing.

Finally, traders received a couple of corporate reports today, even though the first-quarter earnings season is over. Specifically, AutoZone (AZO) stock is headed lower, as investors were not overly impressed with that company’s figures. Also, JinkoSolar (JKS) put out weaker-than-expected results, and that issue is off as a result. - 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 - News regarding potential mergers and acquisitions has quite a few equities moving this morning. Of note, drug giant Pfizer (PFE - Free Pfizer Stock Report) is pulling its $120 billion buyout offer for rival AstraZeneca (AZN), ending its month-long pursuit after the two sides could not come to terms. Elsewhere, shares of food processor Hillshire Brands (HSH) are trading sharply higher on word of a $6.4 billion acquisition bid from peer Pilgrim’s Pride (PPC). In other news, AutoZone (AZO) stock is indicating a modestly higher opening with the auto parts retailer having reported fiscal third-quarter results. – Sharif Abdou

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 - Wall Street ended a mostly higher week and ahead of the long Memorial Day weekend with solid gains on Friday, as each of the averages coasted to largely wire-to-wire wins. In the process, the Standard and Poor's 500 once again ascended the 1,900 plateau, managing to push up to an all-time high in the process. The Dow Jones Industrial Average also scored a healthy gain, reaching its best levels of the session as the day wound down. Volume was light, as it often is on a Friday afternoon during the summer--and this past weekend did mark the unofficial start of the summer season--and especially so ahead of a long weekend.

Behind this latest buying flurry, which, incidentally, made it three wins in a row for the market, was a better-than-expected report on new home sales issued early in the trading day. That metric showed just over a six-percent climb in that housing category, as lower mortgage rates, following months of climbing borrowing costs and the end of the long and painful winter combined to induce buyers to get back into the game, albeit still somewhat cautiously.

In addition to this immediate cause for higher stock prices, there is the underlying sense that investors are still sufficiently cautious that an overheated equity market is not yet at hand. The absence of a blow off at the top, which can follow a period of excess optimism, may be helping Wall Street forestall any meaningful profit taking. The end of earnings season, which was not as bad as some had feared, and the succession of mostly positive economic metrics are also helping the bulls to make their case fairly well. Finally, there continues to be an absence of suitable alternatives to equities, especially with the yield on the 10-year Treasury note now sitting at an unappetizing 2.54%. That is within sight of the 52-week low yield of 2.52%.

As to the market's final numbers, the Dow managed to gain 63 points, to end the day and week at 16,606, while the Standard and Poor's 500 Index, boosted by the aforementioned late push, added eight points, to end up at 1,900. A somewhat better performer was the tech-laden NASDAQ, which surged 31 points, as that index approached the 4,200 mark. The small- and mid-cap indexes also did well; in fact, on a proportionate basis, they acquitted themselves somewhat better than their larger-cap counterparts. 

The good close enabled the market to end the week with moderate gains, and as we head into the final stretch of May, often an unkind month for the bulls, we see that this time around the bulls and bears have essentially fought to a draw. As for the week ahead, in the wake of the generally constructive five-day span that preceded it, we find that the news calendar will be fairly heavy, with data today on consumer confidence due out this morning at 10:00 (EDT). Then, on Thursday, we are due to get revised GDP numbers for the first quarter; the initial estimate showed a scant 0.1% gain. On Friday we are due to get data on personal income and spending. 

Looking to the day ahead, meanwhile, we see that stocks were generally on the defensive in Asia overnight, although equities in Japan managed to buck the aggregate downtrend. In Europe, meantime, most equity groups are now tracking a bit higher. Over here, the futures are showing some nice improvement, with the Dow futures ahead by more than 60 points. The S&P 500 Index futures are now up by more than seven points, while the NASDAQ is better by just over 14 points. Encouragingly, with Friday's gains, all three of these major indexes are now in the plus column for the first time this year. As to the data upcoming in the next hour, or so, expectations are that home prices will have trended a bit higher in the latest series to be issued, while upcoming metrics on consumer confidence are forecast to be about flat with the month before.

Finally, we hope that our readers all had a good and safe Memorial Day weekend, as we remember our brave men and women, some of whom made the ultimate sacrifice to keep the freedoms we enjoy alive.   - Harvey S. Katz         

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