After The Close - The U.S. stock market got off to a strong start today, and managed to extend its gains throughout the session. At the end of the day, the Dow Jones Industrial Average was up 88 points; the broader S&P 500 Index advanced nine points; and the NASDAQ, which led the averages higher, tacked on 25 points. Market breadth showed broadbased buying today, as advancing stocks outnumbered decliners by about 3 to 1 on the NYSE. Strength was found in essentially all of the various market sectors, with leadership in the energy group. The industrials and financials also put in a good showing. Meanwhile, the utilities lagged a bit, as traders, now feeling more bullish, may have been inclined to buy the more exciting names.
Finally, it seems the stock market has broken out of the trading range that it had been locked in earlier this year. Perhaps, as we entered 2014, equity valuations had gotten a bit expensive, and a pause was much called for. Certainly, the sideways move that unfolded was preferable to a more severe market pullback. Further, it seems traders may now be more accustomed to the Fed’s new leadership, and a slightly different tone. Meanwhile, trading volumes have been light lately, and it would be encouraging to see some more participation. Light volumes may suggest that some traders are sitting on the sidelines, and if they enter the market, that could propel stocks higher.
The economic news released this morning was constructive, and further indicated that the economy is on the mend. Nonfarm Payrolls came in at 217,000 for the month of May, which was largely as expected. The unemployment rate remained put at 6.3% for the month. This report pleased traders, as it shows the economy is healthy, but not over-heating. This would also imply that there is little right now to push the Fed in the direction of speedier action.
There also was a few corporate news items released. Shares of Verifone (PAY) traded higher, as the technology company put out strong results. Things did not go as well for Thor Industries (THO). That stock headed lower, as the recreational vehicle maker put out a disappointing report. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned .
12:15 PM EDT - The major U.S. equity indexes are moving higher today and in the process we are once again seeing intra-day all-time highs for the Dow Jones Industrial Average and the S&P 500 Index, the latter of which is on pace for an advance of more than 2% this week. The Dow 30 also is within a stone’s throw of the 17,000 mark, a level many market pundits see as a breakout range. Pushing equities higher was a good jobs report for the month of May (more below). Overall, advancing issues are leading decliners by a wide margin on both the New York Stock Exchange and the NASDAQ, to the tune of nearly four to one on the Big Board.
From a sector perspective, nearly all of the major groups are in the plus column, with a bias toward what some would consider the more risky areas. To wit, leadership is coming from the consumer discretionary, technology, financial, industrial, and energy stocks. The sectors that are most sensitive to the economy are faring better than the more-defensive groups, likely owing to the aforementioned May jobs report. The healthcare, consumer staples, and telecommunications stocks are slightly lower, but still not too far removed from the neutral line. The technology stocks—and the NASDAQ, which is up more than 2% this week—is being led higher by the large-cap technology names, with shares of Apple (AAPL), Intel (INTC - Free Intel Stock Report), and Oracle (ORCL) sitting at or near 52-week highs.
As noted, the jobs report for the month of May was encouraging. Specifically, the Labor Department announced that nonfarm payrolls increased by 217,000 last month, which was in line with expectations. It also marked the fourth-consecutive month that the nation created more than 200,000 jobs, a pace that is needed to make a significant dent in the nation’s unemployment rate, which held steady in May, but is more of a lagging indicator. The jobs number comes on the heels of strong data on both manufacturing and nonmanufacturing activity, and is also another indication that the first-quarter GDP contraction of 1% was a bit of an aberration due to the severe winter weather and that output should pick up considerably over the remainder of this year.
Taking a broader look at things, it is our sense that we are in the midst of a goldilocks market. In this environment, stocks are performing well enough to avoid wide-spread losses and even provide solid return for investors, but not so much that it creates a bubble. In this scenario, investors are operating under the assumption that the economy is neither too hot nor too cold. From a market standpoint, you have a group of investors who are a bit fearful of deflation and are buying bonds, while another group is liking the Federal Reserve’s accommodative monetary policies and what it is seeing from the business beat and are adding selectively to equity positions.
Looking at the remainder of the trading day, we think it will be very hard to knock the bulls out of the driver’s seat, on the strength of the employment data and the likelihood that volume will probably be light as it normally tends to be on near-summer Fridays. - William Ferguson
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 – Investors’ attention is largely focused on this morning’s jobs report, but there are a handful of earnings releases to be aware of, as well. April-quarter financials from ski resort operator Vail Resorts (MTN), apparel and accessories retailer The Men’s Wearhouse (MW),and electronic payments company VeriFone Systems (PAY) were well received, and all three equities are moving modestly higher ahead of the bell, in response. On the other hand, Wall Street took issue with April-period financials from nut and snack producer Diamond Foods (DMND), which fell short of expectations. DMND is down notably in the premarket, as a result. Shares of Hertz Global Holdings (HTZ) are indicating a sharply lower opening this morning, as well, after the car rental agency said that it has to restate its 2011-2013 financials due to accounting errors. – 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 - After several indecisive sessions, the bulls wrested control of the agenda yesterday. Indeed, boosted by aggressive monetary action on the part of the European Central Bank, they pushed stocks broadly and sharply higher, securing additional all-time records for the Dow Jones Industrial Average, the Standard and Poor's 500 Index, and the Standard and Poor's Mid-Cap 400. The small-cap Russell 2000 Composite, an especially strong performer on the day from a percentage basis, remains modestly below its all-time peak, while the tech-laden NASDAQ is still significantly under a record high. But this latter index also sprinted ahead yesterday.
As to the ECB, Mario Draghi, the Bank's President, threw everything but the kitchen sink at the economic woes on the Continent by announcing additional interest rate cuts and a series of expansionary moves in other directions. Although few of these options were unexpected, the fact that they were opted for all at once did impress the world's financial markets, and stocks generally rallied, and with particular enthusiasm on our shores.
Moreover, the ECB head also intoned that the bank might not be finished should conditions demand more curative action. And that is a good possibility given the flagging economies on the Continent, where the recessions are mostly in the rear-view mirror, but no sizable expansion has moved into its place.
As to our markets, they rallied at the open, and save for a brief visit into negative territory at the half-hour mark, remained well into the plus column throughout, maintaining a triple-digit win for the Dow for most of the session, finally closing up by 99 points. There was a better-than-one percent gain for the NASDAQ, at the same time. All of the averages made stellar progress, meantime, as the venerable bull market continues to go forward with full steam and nary a hiccup.
Encouragingly, some of the more downtrodden groups and individual stocks led the way, with such heretofore depressed issues as Whole Foods Markets (WFM), for example, gaining strongly. Also pressing nicely higher were the gold stocks with a rather material one-day upturn by the precious metal. Gold has been in a steady decline over the past fortnight. The steels and the aluminums also tracked nicely higher, with the former having been under fairly broad-based selling pressure in recent sessions. Few groups failed to participate in the day's festivities.
As to other news, there wasn't all that much to report on the economic front stateside, although the Labor Department did chime in with data showing that jobless claims came in at 312,000 in the latest week, which was up a bit from the prior seven-day stretch, but was in line with expectations. That report, which can be a market mover, took on added significance yesterday as it preceded by one day this morning's just-released employment and unemployment figures for May. In that report, which is derived from separate surveys, the data showed that the nation added 217,000 jobs last month, while the unemployment rate held steady at 6.3%. A slight increase, to 6.4%, had been the expectation. The futures, up slightly before the issuance of the latest jobs report, edged a bit further into the plus column in the wake of the reassuring report.
Now, as we look to the markets globally, we find that the principal indexes across Asia were mixed overnight, clearly not taking their cue from our strong market yesterday. It may also have been a case of nervousness ahead of our monthly jobs report. However, there was no such hesitation this morning in Europe, where the Continent's bourses are gaining nicely so far, as bank shares benefit from the easing measures announced by the ECB yesterday.
Finally, today marks the 70th anniversary of D-Day, the opening of the Western Front in Europe. And, accordingly, we take this opportunity to salute the members of the armed forces, who under the command of General Dwight Eisenhower, heroically stormed the beaches of Normandy, with so many giving their lives that day and in the weeks thereafter, in an ultimately successful effort to free Europe--and, in effect, the world, from the Nazi menace, and win World War II. It was clearly the finest hour of the Greatest Generation. - Harvey S. Katz
At the time of this article, the author did not have positions in any of the companies mentioned.