After The Close - The U.S. equity market pressed modestly forward again today, as investors, emboldened by some encouraging economic reports and a flurry of M&A activity, continued to shrug off growing geopolitical unrest overseas. During the latest constructive session for equities, the Dow Jones Industrial Average and the S&P 500 Index hit new intra-day highs, while the tech-heavy NASDAQ showed continued strength. Overall, advancing issues led decliners by a considerable margin on both the Big Board and the NASDAQ.

From a sector perspective, it was mostly a sea of black ink among the top-10 sectors, with the only laggards being the utilities and industrial issues. Indeed, investors, despite some growing international concerns in the Middle East and Eastern Europe, are adding more risks to their portfolios. The outsized gain for the small-cap issues—the Russell 2000 rose nearly 1% today—also was an indication of such movement on Wall Street. In the latest session, leadership came from the more commodity sensitive groups, with buying interest the most pronounced in the energy and basic materials sectors.

As noted, we received mostly encouraging news from the economic front today. Before trading commence on these shores, the Commerce Department reported that durable goods orders rose by 22.6% in July, the highest percentage gain on record. However, when backing out the transportation component, which included huge shipments from aerospace and defense giant Boeing (BA), new orders fell 0.8%. Then at 10:00 A.M. (EDT), the Conference Board reported that consumer confidence rose anew in August, from 90.3 in July to 92.4 this month. These reports from the business beat proved supportive for equities.

The investment community also received some more merger and acquisition news, as fast-food giant Burger King Worldwide (BKW) agreed to acquire Canada-based Tim Hortons (THI) for about $11 billion. The combination, which would create the third-largest fast-food company, is another in the line of growing tax-inversion deals that would lower the company’s corporate tax rate by moving its headquarters out of the United States. The deal, which still requires the necessary regulatory approvals and is being partially financed by Warren Buffett’s Berkshire Hathaway (BRKB), has already triggered some backlash in the public. Walgreen (WAG) had backed out of a similar tax-inversion deal earlier this year on fears of such sentiment. Shares of Burger King Worldwide finished lower, while the stock of Tim Hortons moved higher on announced accord.

In conclusion, although trading volume was rather anemic today, the recent performance of the equity market and the 10-year Treasury note—which closed below 2.40%--is telling us that investors are trading under the assumption that interest rates are not going up anytime soon. As has been the case for most of the extended bull run, the low interest-rate environment is limiting the number of attractive alternative investments to stocks. With a strong second-quarter earnings season in the books, fairly supportive economic news of late, and the investment community’s benign reaction to the growing international tensions, we would not be overly surprised if the bull run had some more gas left in the tank. - William G. Ferguson

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


12:10 PM EDT - The U.S. stock market is pressing modestly higher today. At just past noon in New York, the Dow Jones Industrial Average is ahead 67 points; the broader S&P 500 Index is up six points; and the technology-laden NASDAQ is higher by 14 points. Advancing issues are leading decliners by more than two to one on the NYSE, suggesting today’s move is fairly broadbased. Most equity groups are making progress. Notably, the energy stocks are showing leadership, as they extend yesterday gains. Investors are also showing interest in the health care area. In contrast, the high-yielding utilities have fallen out of favor. As investors may now be feeling more bullish, they may be pursuing the more rewarding, but also riskier, names.

Stocks continue to show strength, bringing many of the major averages to milestone levels. Today’s advance puts the S&P 500 Index just past the 2,000 mark. The Dow is near new high ground, as well. Too, the NASDAQ is well past 4,500 and may soon to be testing the 4,600 mark. It should be noted that investors have been showing a preference for the large-cap issues, as the smaller names have lagged in comparison.

Meanwhile, traders received quite a few economic reports this morning. Specifically, durable goods orders rose 22.6% in July, which was well ahead of the consensus forecast. However, it should be noted that the increase was largely due to orders in the transportation sector. When excluded, the report was far less impressive. Elsewhere, the Conference Board’s Consumer Confidence Index provided a reading of 92.4 in the month of August, which was better than had been anticipated. Meanwhile, housing prices drifted higher in June, according to a couple of widely-followed reports.

Today, traders received confirmation that Burger King Worldwide (BKW) has agreed to merge with Tim Hortons (THI). M&A news is usually good for investor sentiment, and tends to lead to speculation about further deals in a given sector. Meanwhile, DSW (DSW) stock is heading higher, after the apparel retailer put out solid figures and encouraging guidance. - 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 SurveyRestaurants and retailers are in the spotlight today. Indeed, after confirming they were in merger talks yesterday, restaurant operators Burger King Worldwide (BKW) and Tim Hortons (THI) have agreed to combine. Under terms of the deal, THI stockholders would receive roughly C$89.32 a share in cash and stock. An effort to reduce Burger King’s tax bill appears to be at least one of the motivations for the pact, as the combined company would be headquartered in Canada, where Tim Hortons is currently domiciled. Both stocks jumped on the original announcement yesterday and are up nicely ahead of the bell again this morning, with THI showing the most strength.

Elsewhere, on the earnings front, DSW Inc. (DSW) looks to be the big winner, as the shoe retailer reported better-than-expected July-period results. DSW stock is up sharply in the premarket, as a result. Earnings reports from electronics retailer Best Buy (BBY) and chicken processor and distributor Sanderson Farms (SAFM) did not impress investors, however, and both stocks are indicating moderately lower openings this morning, in response. – 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, following a trio of weekly gains in succession, started the concluding week of August on a positive note, with the Dow Jones Industrial Average moving further above 17,000 and with the more broadly configured Standard and Poor's 500 Index pushing up past 2,000 for the first time ever. Couple those gains with an early push above 4,570 by the tech-laden NASDAQ and there seemed to be plenty of good news to go around for the bulls.

Stocks managed to then hold on to those initial gains through the first half of the session, with the Dow pushing up to within some 25 points of its intraday record of 17,151 before easing back below 17,100 in the afternoon. The S&P 500, meantime, which nudged some two points above the psychologically important 2,000 mark, then dipped back below that plateau over the latter half of the session, before closing with more modest, but still decent, gains. 

Helping the U.S. stock market get out to this solid early advance was a good showing by the equity markets in Europe. The principal bourses over there were helped by dovish comments, which had been made at the economic symposium in Jackson Hole, WY late last week by European Central Bank President Mario Draghi to the effect that further monetary stimulus might be needed to prop up the currently laboring economies in the euro zone, including that of Germany, the largest factor in that economic confederation.

Stocks also were helped by some merger and acquisition activity here over the weekend. A pickup in announced combinations often is a positive sign for Wall Street, as it implies that valuations are not out of line. That is especially welcome now, as the stock market has been on a five-year tear, which has seen the leading averages more than double over that span. 

On the other hand, the market was not helped by a slightly disappointing housing issuance. Specifically some 30 minutes into the session, the Commerce Department reported that new home sales had dipped in July (a small gain had been expected), falling to an annualized rate of 412,000 million homes sold last month. That was down from an upwardly revised 422,000 the month before and 454,000 homes in May. Still, sales were up from a year earlier; average prices were a little higher; and the supply of unsold homes increased modestly. A lack of supply had dampened sales somewhat heretofore. All told, it was a rather mixed report, but when offset by gains last month in housing starts and sales of existing homes, this latest metric was not all that disturbing, and stocks did not backtrack very much after the release.

Meanwhile, along with the monetary suggestions from Mr. Draghi, the Jackson Hole meeting also heard from Federal Reserve Chair Janet Yellen. She advised the meeting's attendees that the labor situation in our country, while improving enough to consider an interest rate increase, was not yet strong enough to actually implement one. That, too, seemed to fit in well with equity traders, and the new week got off to this good start.

Encouragingly, traders did not materially pull back in the afternoon, although stocks did give up some of their luster as the day wore on. Still, by the close, the market remained comfortably in the plus column, finally ending the session with much of the formidable early advance intact. On point, the Dow ended the day up 76 points; the Standard and Poor's 500 Index closed up 10 points; and the NASDAQ finished things up with a 19-point gain. The S&P Mid-Cap 400 and the small-cap Russell 2000 also held modest gains on the day. All in all, it was a decent way to begin the week for those long equities.

Now, looking ahead, we see that stocks were mixed overnight in Asia and are generally ahead in Europe so far this morning, with the gains in France coming even though that country's government fell yesterday, necessitating new elections very shortly. As to our futures, they are up nicely so far this morning, with the NASDAQ futures signaling an especially good opening when trading commences in less than an hour from now. As to influences on the trading day, data just issued moments ago showed a 22.6% surge in orders for durable goods in July, abetted by a strong uptick in orders for planes from Boeing (BA). On point, transportation orders soared by 74.2% last month. Then, at 10:00 (EDT), the Conference Board will issue its survey on consumer confidence, where a flattish reading is the expectation. 

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