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After The Close - The U.S. stock market put in a choppy, but constructive, session today. At the end of the day, the Dow Jones Industrial Average was up 19 points; the broader S&P 500 Index advanced two points; and the NASDAQ, which assumed a leadership role, tacked on 15 points. Market breadth showed modest support for equities, as advancers outnumbered decliners just slightly on the NYSE.

These figures were more encouraging on the NASDAQ. Most market sectors made progress. There were gains in the industrial issues. The technology and financials also put in a good session.  Meanwhile, the utilities traded notably lower.

Technically, the stock market has rallied considerably over the past couple of weeks. This is likely a constructive development, as it shows that the bulls are still in control. Meanwhile, trading volumes remain a bit light, and we continue to look for broader participation.

There were no economic releases issues this morning. However, tomorrow will likely be a slightly busier day, as wholesale inventories for the month of April are set to be released.

There were a few corporate news items worth noting. Shares of Comverse (CNSI) traded lower, as the diversified communications company put out weaker-than-anticipated results. Elsewhere, there was some M&A news this morning, and that may have helped lift sentiment. Merck (MRK - Free Merck Stock Report) has agreed to acquire Idenix Pharmaceuticals (IDIX) sending that stock up sharply. Analog Devices (ADI) has agreed to purchase technology company Hittite Microwave (HITT). Also, in the food industry, Tyson (TSN) has agreed to buy Hillshire Brands (HSH). - Adam Rosner

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


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12:15 PM EDT - In the world of physics, they tell us that a body in motion will continue to move in one direction until acted upon by an outside force. The same can often be said about the stock markets. After setting new records last week, both the Dow Jones Industrial Average and NASDAQ hit new intraday highs this morning.

While there were no new economic headlines to contend with at the start of the new trading week, investors did receive encouragement from the recent spate of merger and acquisition activity. Tyson Foods’ (TSN) announcement that it would be paying $8.6 billion to acquire Hillshire Brands (HSH) sent shares in the latter up as much as 5% in early morning trading. Meanwhile, shares of Hittite Microwave Corp. (HITT) catapulted 29% when word came out that it would be bought out by chipmaker Analog Devices (ADI). The biggest jump, however, was recorded by Idenix Pharmaceuticals (IDIX), whose shares tripled after Merck & Co. (MRK - Free Merck Stock Report) said it would be adding the company to its fold in a $3.9 billion deal. Stocks also got a lift from a percentage point gain in Apple (AAPL) stock. Shares in the computer and consumer electronics maker recently split 7-for-1, making them more accessible to retail investors.

At the noon hour of trading in New York, all three of the major U.S. equity indexes were near their highs for the morning. The tech-laden NASDAQ composite held a slight edge with a gain of right around half a percentage point, but the blue chip Dow Industrials and broader-based S&P 500 were not far behind, each showing gains of around a quarter percent.

Trading was a bit less inspired across the Atlantic. Although they all took a different route getting there, all three key bourses were showing near-identical gains at around 12:00 EDT, with London’s FTSE, Germany’s DAX, and France’s CAC-40  all up about a quarter of a percentage point. - Mario Ferro

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

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Stocks to Watch from The SurveyWhile the earnings calendar is quite light today, there was a flurry of M&A activity over the weekend. Meat processor Tyson Foods (TSN) has beat out fellow suitor and industry peer Pilgrim’s Pride (PPC) in the race to acquire meat-centric food services provider Hillshire Brands (HSH). Indeed, Hillshire has agreed to be bought by Tyson for $63 a share, or roughly $8.55 billion including the assumption of debt. HSH is moving nicely higher ahead of the bell, in response, while TSN is indicating a modestly lower opening this morning. Additionally, drugmaker and Dow-30 component Merck (MRKFree Merck Stock Report) has struck a deal to a purchase Idenix Pharmaceuticals for $24.50 per share in cash, causing MRK stock to move slightly lower in the premarket. Finally, Analog Devices (ADI), a designer and manufacturer of integrated circuits, has agreed to pay $78 a share to acquire industry peer Hittite Microwave Corp., a 29% premium over Hittite’s preannouncement closing price. 

In other news, shares of Family Dollar (FDO) are up sharply in pre-market trading, after activist investor Carl Icahn revealed that he has amassed a 9.4% stake in the discount retailer. – 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 new trading week is set to kick off stateside, with two of the major equity indexes, the Dow Jones Industrial Average and the S&P 500 Index, seemingly hitting new highs on a daily basis. The recent spate of selective buying has both indexes approaching some milestone levels, with the Dow 30 within a stone’s throw of 17,000 and the broader S&P 500 Index moving toward 2,000. Pushing the equities higher in recent weeks has been some supportive, but not overly impressive economic data (more below) and the continued accommodative monetary policies in place. The latter, including near-zero percent short-term interest rates, are providing little investment alternatives to equities. That said, we are in a rare stretch of trading referred to as a goldilocks market, where both stocks and bonds continue to push higher at the same time.

On Friday, the market got a boost from a constructive report on the labor market. Specifically, the Labor Department announced that nonfarm payrolls increased by 217,000 in May. It marked the fourth-consecutive month that jobs creation topped the 200,000 mark, a level seen as needed to make a significant dent in the jobless rate, which held steady last month, but is a lagging indicator. The jobs data capped off a good week on the business beat, which also saw encouraging reports on manufacturing and nonmanufacturing activity from the Institute for Supply Management. That, combined with the Fed’s Beige Book summation of economic conditions that said the economy is still growing at a modest to moderate pace was music to the ears of investors. Not surprisingly, the more economically sensitive sectors were in favor on Friday.

The new week will be quiet on both the economic and earnings front. We sense that this could be good news for the bulls as we might see a vacuum of trading on display, which could bring last week’s strong positive sentiment into the new five-day stretch. On the economic front, investors will be interested to learn how retail sales fared last month—the report is due on Thursday. This data should provide a good deal of insight on how the consumer is feeling these days, which is important as the big-ticket summer vacation season commences in a few weeks. Meanwhile, the only earnings news of significance this week will come from Hertz Global (HTZ) and lululemon athletica (LULU), which have seen their stocks be quite volatile of late.

With less than a half-hour to go before the start of trading on these shores, the U.S. equity futures are down ever-so slightly, suggesting some mild profit taking when trading gets underway. Overnight the major indexes in Asia finished modestly higher, while trading in Europe is mixed. We think it will be hard to keep the bulls down despite the market looking overextended right now. Stay tuned. - William G. Ferguson 

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