After The Close - Stocks edged higher on Friday in quiet fashion, despite the session marking a “quadruple witching” day that occurs upon the expiration of stock options, index options, index futures, and single-stock futures, and can boost volatility.
At the close, the Dow Jones Industrial Average was up 26 points, the NASDAQ gained nine points, and the S&P 500 added three points. Advancers topped decliners by a 4-to-3 margin on the New York Stock Exchange.
For the week, there was good news to go around for investors, with the Dow and the S&P setting a series of all-time highs, and the NASDAQ pushing to heights not seen in 14 years. The economic data were good enough for the Federal Reserve to continue slowing its bond-buying program although, truthfully, there would probably have to be some serious backsliding in business conditions for the Fed to put its tapering plans on hold.
A bit surprisingly, the ominous tidings out of Iraq did not take a greater toll on investor sentiment. It now looks as if a change in government will take place there, and it is tough to gauge how much support any new leadership will have and if a new president will be able to put a stop to the violence that has arisen.
The uncertainty in Iraq is helping push oil prices into a higher range, which is generally a negative for the economy. So far, though, Wall Street hasn’t pushed the panic button on oil prices, since the main producing oil fields in southern Iraq are far from where the fighting has been occurring.
Reacting to the added premium in oil prices, the energy sector was one of the best performing group on Friday. Shares of oil services and equipment providers, including those of industry leaders Schlumberger (SLB) and Halliburton (HAL) turned in nice percentage moves as a result.
Friday’s stock market action also contained one of the elements that has been driving share prices higher of late, in the form of merger and acquisition activity, or at least an attempt at it, with biopharmaceutical company AbbVie’s (ABBV) bid for competitor Shire (SHPG). The target company, whose shares surged, is based in Ireland. Also making for a strong healthcare sector was notable interest in Kite Pharma (KITE), an IPO.
Overall, stocks have turned in a solid performance in 2014 as summer begins, although rising oil and gold prices point to fresh worries investors will need to deal with. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:15 PM EDT - With little in the way of market moving news today, equities continued to trade higher this morning, maintaining their glow in the wake of the Fed’s recent market-friendly comments. Looking at the major U.S. indexes, the broad S&P 500 Index, which hit its 21st high of the year yesterday, appears set to make a run for number 22. The Dow Industrials, meanwhile, have been taking it relatively easy of late, going 10 days without setting any closing records. Not to be outdone, however, the blue chip index breached a new intra-day high at around 11:00 EDT, marking its first foray into new ground since June 9th.
Meanwhile, the S&P Volatility Index, commonly referred to as the VIX, has been taking the opposite course, tracing out lows not seen since February of 2007. This is all the more notable considering that today marks a “quadruple witching”. With stock and index futures and options all expiring, we may yet see an uptick in volatility before the day is through, but likely not enough to disturb the general calm of the markets.
As we crossed the noon hour in New York, the S&P 500 and Dow Industrials had backed off slightly from their highs earlier in the morning, with each holding onto about a quarter percent gain. The upside was largely driven by strength in health care, oil & gas, and industrial issues. The NASDAQ, which has been the relative laggard on the session, was a few points into positive territory, having bounced back from a brief dip into the red, as technology shares were among the few weak sectors this morning.
As for the European markets, trading activity was quite mixed. London’s FTSE continued its winning ways, rising a little less than half a percentage point on the session. Meanwhile, although Germany’s DAX spent most of the trading day in the black, it had slipped to below breakeven as the closing bell approached. Finally, France’s CAC-40 balanced out the trio with a decline of half a percent. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any companies mentioned.
Stocks to Watch from The Survey – Investors are digesting earnings reports from several notable companies this morning, and the news, in general, was not impressive. The biggest disappointments came from software developer Oracle Corp. (ORCL), which delivered May-period sales and earnings that missed the mark, and firearms manufacturer Smith & Wesson (SWHC), which reported April-quarter earnings in line with expectations, but issued a weaker-than-anticipated forecast. Both equities are moving notably lower ahead of the bell, as a result. Shares of restaurant operator Darden (DRI), steel manufacturer AK Steel (AKS),and business solutions software provider TIBCO (TIBX) are also down in the premarket on earnings news. On the bright side, investors cheered May-period results from used car retailer CarMax (KMX), which were better than expected, and pushed the stock sharply higher in pre-market trading.
On the M&A front, drugmaker AbbVie (ABBV) made a $46 billion bid to acquire industry peer Shire, although the offer was rebuffed by the Ireland-based company. Finally, activist investor Carl Icahn is putting pressure on discount retailer Family Dollar (FDO) to put itself on the auction block. Mr. Icahn owns 9.4% of FDO stock, which is indicating a slightly higher opening this morning. – 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, which had trended higher over the prior four trading sessions--with the most notable advance taking place on Wednesday of this week in the wake of the Federal Reserve's latest FOMC meeting--paused for much of the day yesterday, easing back a bit in some apparent profit taking through mid-afternoon. Then, the bulls emboldened by the dovish stance of the Federal Reserve, which had been underscored by benign monetary and interest-rate musings in the wake of Wednesday's FOMC meeting, started to buy stocks again. By 2:30PM (EDT), in fact, investors seemed ready to make a late charge, nearly wiping out the day's losses in a matter of minutes. Then, after remaining just short of breakeven for the next hour, those market optimists managed to orchestrate a further turnaround, and stocks ended the latest session with modest advances.
Meanwhile, the final gains, albeit not appreciable, took place on a day in which the economic news was relatively positive and there were no new negative tidings on the global front--especially out of strife-torn Iraq--a worrisome hot spot that has heated up over the past fortnight to the dismay of investors both here and overseas.
As to the business influences, the reports showed a further decline in initial weekly jobless claims, a better-than-expected reading in the Philadelphia Federal Reserve Index of manufacturing activity (which rose to its best level since last September), and a nice gain in the leading indicators. This latter metric rose 0.5% in May, suggesting that business strength was likely to pick up in the coming months. These decent readings also imply that the nation's economy, which contracted by 1.0% in the first quarter, due to a whole host of weather-related issues, could well advance by 3%, or so, in the fast-ending three months. Beyond this half, we sense that GDP could gain 3%, or a bit more, in the absence of a further deterioration overseas.
Meanwhile, in other news, gold heated up again. All told, the precious metal, which had reversed months of losses in the prior week and a half, surged in the latest session, gaining better than $40 an ounce, to past $1,300--a two-month high. The gains in the metal were propelled by the continuing tensions in Iraq and signals from the Fed that short-term interest-rate targets will be held steady for a while longer. Overall, gold jumped by more than 3%. Not to be outdone, silver added more than 4%, on the day to end close to $21 an ounce.
As to the stock market, valuations are elevated at this juncture, but that is nothing new, as this has been the case for months, if not years. However, it is also a fact that there are few other places to put one's assets these days, and that, as much as anything, has been pushing stocks higher, or at least staving off more-than-incidental profit taking. Indeed, the latest setback, which took place in the prior week, is instructive in this regard, as the increase in global tensions did little more than remove some slight froth. The Standard and Poor's 500 Index, in fact, pushed up to a closing high yesterday, affirming the shallow and brief nature of the profit taking to this point.
As to the final numbers yesterday, the Dow Jones Industrial Average, weak for most of the session, finally ended up by 15 points; the Standard and Poor's 500 Index climbed by two and a half points; but the NASDAQ eased back by four points. The small- and mid-cap benchmarks, meantime, were mixed as was the advance-decline ratio. One notable area of strength, not surprisingly, were gold stocks, with Newmont Mining (NEM) gaining almost four percent on the day, on those higher gold prices. Oil also rose on the oil-related fears out of Iraq.
Looking ahead to a new day, we find that equities traced a mixed path overnight in Asia, with gains in Hong Kong offsetting losses in Japan. Still, based on improvement earlier in the week, the Nikkei was up nearly 2% over the five-day stretch. In Europe, the major bourses are tracking mostly higher this morning, as equities on the Continent were in line for a weekly gain, as well. And over here, we find that the equity futures are pointing slightly higher at this hour. As to events taking hold today, it will be a session with few economic news items of note and limited earnings releases, as we are still several weeks away from the start of profit reporting season. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.