Loading...
 

After The Close - The major U.S. equity indexes were able to build off of yesterday’s late-day rally in a notable fashion today. Indeed, the averages were sharply higher at the commencement of trading on these shores and, for the most part, never looked back. Pushing equities higher was some better-than-expected quarterly earnings (see below) and some reassuring news from Eastern Europe, a fluid situation that on several occasions over the last few months has raised the volatility in the world equity markets. Overall, advancing issues led decliners by a healthy margin on both the New York Stock Exchange and the NASDAQ.

What was different from yesterday’s late rally was today’s buying was a bit more encompassing. The large-cap stocks, which have performed very well over the last two sessions, were joined by the small- and mid-cap issues today. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were 87, 29, and nine points higher, respectively. It also was encouraging sign for the bulls that the move higher was made on higher volume today. Moreover, investors showed a bit more appetite for risk than in the last few volatile sessions.

From a sector perspective, there was much to like today. Leadership came from the energy, telecom, and technology groups. Meantime, the basic materials stocks, which faltered yesterday, weighed down by the steel issues, showed some life during today’s session. Within the energy space, the stocks of the integrated oil and gas companies, as well as last year’s big laggards, the coal stocks, performed very well. In the telecommunications sector, the stock of Sprint Corp. (S) rose after the provider reported a smaller-than-expected quarterly loss.

Speaking of quarterly earnings, it was, for the most part, a good day on that front for Corporate America. In addition to the Sprint report, investors cheered the latest quarterly results from Dow-30 component Merck & Co. (MRK - Free Merck tock Report), which saw the drugmaking giant’s profits rise in the first quarter of 2014, despite a retreat at the top line. The Merck release was the headline story on a busy day for the healthcare sector, which also saw Forest Laboratories (FRX)—a good report—and Bristol Myers-Squibb (BMY)—a disappointing one—report its latest quarterly results.

We also received the first important report on the U.S. economy this morning in a week that is shaping up to be a big one on the business beat. Specifically, the Conference Board, a New York City-based research organization, said that its reading for consumer confidence eased from an upwardly revised rate of 83.9 in March to 82.3 this month. Although the latest figure was a bit weaker than expected, it was still comparatively high and does not change our current thinking that the level of business activity going forward will be decent. The report also did not hurt the performance of the consumer discretionary sector, with most of the groups in the space, including the stocks of retail department stores, footwear, and apparel companies, moving higher following the release. Many of the casino and gaming stocks also were up significantly, including the shares of Las Vegas Sands (LVS) and MGM Resorts (MGM). Helping the gaming stocks was a strong quarterly report from the latter casino and hotel operator.

Looking ahead to the remainder of this busy week on Wall Street, we expect the investment community to keep a close eye on the business beat, even with earnings season still in full gear. That is because over the next three days we will receive several prominent reports on the economy, including the latest data on GDP, manufacturing activity, personal income and spending, and employment and unemployment. The labor report, along with tomorrow’s conclusion of the Federal Reserve’s two-day monetary policy meeting always have the potential of being game changers for equity market participants, even more so when considering that the Fed’s accommodative monetary policies over the last half decade have played a big role in the equity market’s success. Investors should note that the Dow Jones Industrial Average finished today’s session less than 100 points from its all-time high. - William G Ferguson

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 U.S. stock market is making some progress today, as investors seem pleased that the situation in Russia shows signs of stabilizing. At just past noon in New York, the Dow Jones Industrial Average is up 85 points; the broader S&P 500 Index is ahead eight points; and the NASDAQ is tacking on 21 points. Market breadth is favorable, as advancing issues are outpacing decliners by about two to one on the NYSE. The market sectors also suggest some strength to today’s session. There is leadership in the energy sector, as the price of oil is up over 1%, to $102 a barrel. The basic materials sector is also making strides. However, some of the industrials and the utilities are lagging.

Technically, today’s move higher puts the S&P 500 Index back to near the 1,880 mark. Notably, the broadbased index has encountered some resistance at this level a few times during March and April. So, this may be an area to watch. Sentiment seems to be supportive today, as the VIX is slightly lower, to under 14.

There were a couple of notable economic reports released this morning. Specifically, the Conference Board’s reading on consumer confidence came in at 82.3 for the month of April, which was just below the consensus view, but still above the important 80 mark. Elsewhere, the S&P Case-Shiller Home Price index also showed progress in its latest survey.

Meanwhile, the earnings season moves on. Today, we heard from Merck (MRK - Free Merck Stock Report). That Dow issue is trading higher, after the drug giant issued a respectable profit, but weaker-than-anticipated revenues. Things did not go as well for Coach (COH). That stock is off, as investors are concerned about sales, particularly in North America. After the close today, we will hear from eBay (EBAY). - 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 Earnings season is still going strong, and investors have their hands full digesting quarterly reports this morning. There was a good amount of positive news, as Wall Street seems pleased with results from drugmakers Merck (MRKFree Merck Stock Report) and Forest Laboratories (FRX), restaurant operator Buffalo Wild Wings (BWLD), energy companies Valero (VLO) and Suncor (SU), engine manufacturer Cummins (CMI), and telecommunications company Sprint (S). Indeed, all of these stocks are moving higher ahead of the bell, in response.

It was not all good news, however, and one of the biggest disappointments came from tire manufacturer Goodyear Tire & Rubber (GT), which cited inclement weather as one of the reasons for its top- and bottom-line misses. GT is down notably ahead of the bell, as a result. Investors also seem displeased with reports from leather goods company Coach (COH), agricultural commodities processor and manufacturer Archer Daniels Midland (ADM), and drugmaker Bristol-Myers Squibb (BMY), all of which are indicating lower openings this morning.

Elsewhere, Wall Street doesn’t seem to know what to make of nutritional supplements company Herbalife (HLF), which reported better-than-expected adjusted earnings, but eliminated its quarterly cash dividend, saying that it will, instead, focus on share repurchases. The stock has bounced around in the premarket, but is little changed at present. – 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 bulls and bears started the new week, and the final three days of the month of April, in choppy fashion even by the standards of early 2014, a notably volatile four months by any measure. To recap, an initial buying surge on optimism that merger news was heating up again, helped to lift the 30-stock Dow Jones Industrial Average to an even 16,500 shortly after the day's open. That brought this blue-chip composite to within 130 points of the all-time high it reached earlier this year. In all, the Dow's early run up brought the morning gain to almost 140 points. 

But those good feelings could not last, and stocks started to pare their hefty gains as the morning wore on, and by early afternoon, the Dow was off about 50 points, for a reversal of nearly 200 points. The other averages fared even worse, with the NASDAQ, which had climbed by more than 30 points early in the day, backtracking to a mid-session loss of some 70 points, as concerns about valuations in some sectors and worries about the Ukraine and Russia held optimism in check. But the bulls could not be denied for long, and after reaching the day's nadir at about 1:30 PM (EDT), the market started to rebound on bargain hunting.       

In fact, within less than two hours, the Dow had erased its early afternoon losses and climbed back to a low triple-digit gain once again, while the other large-cap averages, led by the Standard and Poor's 500 Index and even the NASDAQ (for a time, at least) made it back into positive territory, albeit much less impressively. Things were not as cheery for the smaller-cap indexes, as an apparent intolerance for risk among traders remained high.

Behind these gyrations was renewed aggressive selling in the high-flying Internet, biotechnology, and social networking names that proliferate on the NASDAQ. This skittishness and selling in these high-profile groups had, for a time, countered the rise in optimism that had followed the pickup in deal making earlier in the day, as well as strength in the telecoms, and a sense of assurance that was evolving from a stronger-than-expected number on pending home sales. This latter metric rose 3.4% in March--the first gain in nine months--and may have signaled that sales of existing homes--which were largely flat last month--could soon start to firm up.

As noted, the leading equity averages made a full round trip, gaining aggressively, then losing all of that early increase, and finally regaining much of their lost ground. So, by the close, the indexes were mostly in the black, led forward by the Dow, which was a beneficiary of strength in two big telecom issues, AT&T (T - Free AT&T Stock Report) and Verizon (VZ - Free Verizon Stock Report). Also, in deal news, U.S. listed shares of AstraZeneca PLC (AZN) jumped 12%, after drug behemoth and Dow-30 component Pfizer (PFE - Free Pfizer Stock Report) confirmed it had again approached AstraZeneca about a possible takeover valued at about $100 billion. Pfizer shares also rose nicely on the day, gaining 4%, but by no means doing as well as its intended merger partner. Countering strength in these areas was another selloff in the basic materials stocks, notably the economically sensitive steel issues.

Still, while the late comeback by the market did help the averages make some notable headway, the aggregate improvement could not overcome the early selling in some key NASDAQ names, which ended the session sharply in the red. As for the market as a whole, the late turnaround did help, but not sufficiently to put all of the averages into the black, as we saw losses in the Standard and Poor's Mid-Cap 400 Index and the small-cap Russell Composite. The NASDAQ, meantime, fought to a virtual draw, easing by a mere point. 

At the same time, earnings continue to come out, and today will be another heavy day for such releases, as well as for the issuance later this morning of data on consumer confidence. Investors will be waiting to see if last Friday's good news on the companion report on consumer sentiment will be matched with this survey from the Conference Board. Expectations are upbeat ahead of this release. Today also marks the start of the Federal Reserve's two-day FOMC meeting.

As to the markets around the globe, we saw some weakness in Asia overnight, while Europe's bourses are pressing ahead in more bullish fashion, especially Germany's DAX, which has been among the more volatile indexes on the Continent recently. And over here, generally upbeat earnings, especially from drug making behemoth Merck (MRK - Free Merck Stock Report) earlier this morning are lighting a bullish fire under U.S. futures, with the Dow, the S&P 500, and the NASDAQ futures all signaling a strong market opening when traders get down to business in less than an hour from now. - Harvey S. Katz             

At the time of this article's writing, the author had positions in PFE and T.