After The Close - The U.S. stock market put in a constructive session today. Further, the market held, and even built, on its gains through the afternoon, which as discussed here in the past, is a positive indicator. All told, the Dow Jones Industrial Average closed up 64 points; the broader S&P 500 Index advanced 11 points; and the NASDAQ, which assumed a leadership role once again, tacked on 39 points. It should be noted, that the small cap stocks, as measured by the Russell 2,000, had an especially good session, suggesting that speculative sentiment is likely alive. Market breadth showed widespread buying of equities, as advancing stocks outnumbered decliners by about three to one on the NYSE. Further, all of the major market sectors made strides. There was strength in the utilities, which is somewhat surprising since these issues tend to be defensive holdings. Also, the healthcare and technology shares did quite well. In contrast, the industrials, while higher, lagged a bit today.
Technically, the stock market continues to move higher, after staging a modest pullback in January. The fact that all of the major averages have been participating in the recent advance is also encouraging. Given the quick and strong rebound, some consolidation may now be in order. Hopefully for the bulls, the S&P 500 Index can stay above 1,800 level, as this area may carry some “psychological” significance. Further, it would be helpful to see leadership emerge among the various stock sectors, as this can be a driving force behind broader market rallies. Notably, the technology and healthcare names have helped support the market lately, and this could well continue. Meanwhile, the VIX was lower again today, indicating sentiment has been turning bullish.
Traders looked past today’s economic news, which included lackluster readings on retail sales and jobless claims. There were a number of earnings releases issued today, as well. We heard from Whole Foods (WFM). That issue was off after the specialty supermarket put out a weaker-than-expected report. In technology, Cisco Systems (CSCO - Free Cisco Stock Report) provided a weak outlook and that Dow-30 stock traded lower, too. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:00 PM EST - Stocks have recovered from weakness at the opening bell, and are now modestly higher, despite some disappointing earnings and economic news. Right around the noon hour on the East Coast, the Dow Jones Industrial Average is up 30 points and the tech-heavy NASDAQ is 17 points to the good. Similarly, market breadth has turned positive, with the number of advancing issues outpacing decliners by a clear-cut margin on the New York Stock Exchange.
Yesterday’s mixed showing on Wall Street left investors in need of positive reinforcement coming into this morning’s trading. That was even more the case after Dow-30 component Cisco Systems (CSCO - Free Cisco Stock Report) reported lackluster fiscal second-quarter results following last night’s closing bell and indicated that revenues may drop modestly again in the current quarter. Cisco shares are the leading percentage decliner on the Dow, and contributed to the poor sentiment early on.
A weak retail sales figure for January released before the start of trading also discouraged the bulls. Rough winter weather was clearly a factor limiting sales, but to what extent is unclear.
Meanwhile, yet another snowstorm along the Atlantic seaboard has delayed the Senate testimony of recently appointed Federal Reserve Chairwoman Janet Yellen, with government offices in Washington, D.C. closed today. Ms. Yellen’s appearance on Tuesday before the House of Representatives helped spark a big rally when she strongly affirmed the continuity of the policies her predecessor espoused.Stocks have fared very well in the past few years as the Fed has provided major support to the economy.
Helping to lift investors’ spirits was news that Comcast (CMCSA) has agreed to buy Time Warner Cable (TWC) in an all-stock deal worth $45 billion. Time Warner Cable stock is up nicely as a result. The move will need to pass regulatory muster, of course, and it remains to be seen if industry officials are okay with allowing intact what promises to be a powerful combination. That is even as there does not appear to be any geographic overlap between the two companies.
In other corporate news, shares of PepsiCo (PEP) are off after reporting share earnings, even though the soft drink giant topped expectations on that score. Revenues a bit shy of forecasts and no sign that the company would be separating its North American snack food and beverage lines into stand-alone units seemed to disappoint investors.
Heading into afternoon trading, the tone of stock market action is much better than at the start of the day, but not overly exuberant. - Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Earnings season is still going strong, with the most recent batch of reports headlined by networking equipment bellwether Cisco (CSCO – Free Cisco Stock Report). The company’s January-period results were generally in line with expectations, but management’s forecast left Wall Street wanting more, as weakness in emerging markets will likely weigh on near-term sales. The stock is down in pre-market trading, as a result. Other stocks moving lower ahead of the bell on earnings news include grocer Whole Foods Market (WFM), data services provider NetApp (NTAP), beverage and snacks giant PepsiCo (PEP), and packaged foods company Mondelez International (MDLZ).
On the other hand, investors appear pleased with quarterly financials and/or outlooks from television and entertainment company CBS (CBS), restaurant operator Burger King (BKW), semiconductor maker NVIDIA Corp. (NVDA), cosmetics provider Avon Products (AVP), tire manufacturer Goodyear (GT), and generator maker Generac (GNRC). The stock of online travel company Orbitz Worldwide (OWW) looks like the biggest winner, and it is soaring in pre-market trading on earnings news.
There was also a big announcement on the M&A front, as cable television provider Comcast (CMCSA) has agreed to acquire industry peer Time Warner Cable (TWC) in an all-stock deal valued at roughly $45 billion. TWC is indicating a sharply higher opening on the news, while CMCSA is moving slightly lower in the premarket. Finally, engineering and construction company Foster Wheeler (FWLT) has agreed to be taken over by industry peer AMEC for about $3.3 billion, causing FWLT stock to move modestly higher 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 - Wall Street ran into a little resistance on the way to a fifth straight winning session yesterday and for much of the day, the Dow Jones Industrial Average was in the red. However, the tech-heavy NASDAQ, the Standard and Poor's 400 Mid-Cap Index, and the small-cap Russell 2000 Composite managed to hold on the plus side of the ledger.
There were no big economic issuances of note yesterday, as stock market watchers and economic pundits waded through one more session with few key business news items and fewer earnings reports to digest. And, after Tuesday's soothing testimony before the House of Representatives Financial Services Committee by Federal Reserve Board Chair Janet Yellen, Federal Reserve watchers took a one-day respite before Ms. Yellen again appears before Congress today. This time, she will go in front of a Senate committee to presumably cover the same ground. In her Tuesday testimony, she basically intoned that she would continue along the same path as her predecessor, Ben S. Bernanke, which would imply further monetary tapering in the months to come. However, there was one key development, as the House passed an increase in the debt ceiling. Then, last night, the Senate passed an increase in the borrowing limit as well, but not without some drama along the way.
Meanwhile, after yesterday's directionless path, which finally resulted in the Dow falling back by 31 points and the Standard and Poor's 500 Index, which had been in and out of the plus column all day, giving back a token half a point. However, the NASDAQ, as noted, showed some leadership advancing by 10 points. The small- and mid-cap composites also hung onto small and solid gains, respectively, as the sector rotation continued. Overall, our sense is that the market remains fairly valued, as much of the January and early February retracement has been made up. In fact, the NASDAQ holds a nominal gain for the year. It now will be up to the economy, earnings, the international sphere, and the Fed to prove notably supportive, we think, to allow the bull to run further in the months to come.
Also, in addition to the equity market, the price of gold rose for a sixth time in as many days, although such quotations remain well under their record levels of a year ago; gold is now off slightly this morning; the U.S. government posted a budget deficit of $10 billion for January; and oil prices rose once again, and settled in just above $100 a barrel; oil, too, is a bit lower thus far today, and has again slipped nominally below $100. Thus, as we look out to a new day at a snowy New York City, and across much of the rest of the East Coast, talk of a stock market correction has been all but silenced for the moment.
Now, that new day is about to get under way, and we see that stocks across Asia put in a weaker session overnight, especially in Japan, while in Europe, equities are lower, as well, thus far this morning. And on our shores, the Standard and Poor's 500 Index futures are showing a sharp 14-point loss, with less than an hour to go before the start of the new trading day, while the NASDAQ futures are off by 24 points.
As to the economy, after a three-day hiatus, we have received data showing that weekly jobless claims ticked up slightly, while retail sales eased by 0.4% in January, but were flat, if we exclude the auto component. That showing, too, brought few cheers. Thus, at this time, the market seems poised to start the day's festivities on a notably lower note. Finally, there are earnings to deal with this morning, as Dow component and networking giant Cisco Systems (CSCO - Free Cisco Stock Report) reported somewhat disappointing metrics after the close of trading yesterday and that stock is indicating a somewhat lower opening, as is food retailer Whole Foods Market (WFM) stock. That company's latest quarterly results also put off investors to a degree.
At the time of this article's writing, the author had positions in CSCO.