After The Close - It was about as good as it gets on Wall Street today, with stocks rallying strongly on favorable political and economic news. At the close, the Dow Jones Industrial Average was up 182 points and the NASDAQ gained 35 points. As for the broader market, gainers outpaced losers by a wide margin on the New York Stock Exchange.
The session’s tone from the outset was in sharp contrast to last week’s unenthusiastic trading, when worries about the fallout from a weekend vote about Crimea seceding from Ukraine and joining Russia dominated the headlines. The outcome of the vote may have been a foregone conclusion, but the response of Europe, the United States, and Ukraine was not necessarily.
As it was, the worst-case scenario of an escalated military conflict did not evolve, and the sanctions so far imposed by Europe and the United States on individuals in Russia and Crimea don’t appear too worrisome. Of course, there could be further developments down the road that become cause for concern. But in the session just ended, the bulls enjoyed a relief rally.
Adding to the positive sentiment was a much-better-than expected economic report on the nation’s industrial production in February. That helped lift stocks in the industrial and technology sectors. Dow-30 component Boeing (BA - Free Boeing Stock Report) turned in a good performance as a result. One of the day’s biggest winners was an industrial stock, too. Shares of graphics designer Schawk (SGK) soared when the company agreed to be taken over by Matthews International (MATW). Among tech shares, Yahoo! (YHOO) shined after word that China’s Alibaba would be going public through an IPO. Yahoo! owns nearly 25% of Alibaba.
However, defensive investments, such as gold and government bonds, fell. The price of an ounce of gold eased $8 in New York, pressuring shares of miners, including those of Newmont Mining (NEM). Meanwhile, the yield on the 10-year Treasury note rose from 2.65% to 2.69%, with the price moving in the opposite direction. Oil prices pulled back, too, as some of the fear factor about trade sanctions on Russia, a big oil producer, did not immediately materialize. Oil prices have also come under pressure as Iraq has ramped up production sizably.
Tomorrow brings fresh economic data on the housing market and inflation at the consumer level. The Federal Reserve begins a two-day meeting on Tuesday, as well. The thinking is that the central bank will continue to taper its bond-buying program. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned
12:30 PM EDT - The U.S. stock market moved sharply higher earlier this morning, after hitting a rough patch last week. While stocks are still up nicely, we will be looking for some follow through later this afternoon, to show that traders are committed to the move. At just past noon in New York, the Dow Jones Industrial Average is up 186 points; the broader S&P 500 Index is ahead 18 points; and the technology-heavy NASDAQ is higher by 45 points. Market breadth shows widespread support for equities, as advancers are outpacing decliners by about three to one on the NYSE. Strength can be found throughout all of the market sectors. There is leadership in the technology group, with gains in the hardware and equipment names. Too, the industrial issues are advancing, helped by the aerospace stocks. While there are no weak sectors in the market today, the consumer non-cyclical issues are underperforming a bit.
Technically, today’s move higher puts the S&P 500 Index back above the 1,850 level. This is likely an important area for a number of reasons. For one, the market hit some resistance here in late December, in January, and again last week. So, overcoming this price area has been an important feat for the bulls. Further, as this number corresponds to a large round figure, it may carry some “psychological” significance with traders and retail investors. It is likely important that the bulls can defend this level, and follow through with additional gains over the next few days. If this happens, the next target remains the S&P 500 high of 1,884, and clearly testing that area will be something to watch for.
Investors received a few notable economic reports this morning. Industrial production increased 0.6% in February, which was slightly better than had been anticipated. Capacity utilization also moved higher to 78.8%, which is encouraging, too. Elsewhere, the Empire State Manufacturing Survey came in with a reading of 5.6 in March, which was ahead of analyst expectations, and an improvement over the prior month’s reading. Further, the real estate market recovery seems to be intact, as the NAHB Housing Market Index strengthened to 47 in March, up from 46 in February.
We also received a limited number of earnings releases this morning, with mostly small cap names reporting. However, over the next few days we will hear from a few leading companies, including Oracle (ORCL), Adobe (ADBE), FedEX (FDX), and GeneralMills (GIS). - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
10:15 AM EDT - Last week's stock market weakness is now, apparently, a distant memory, as Monday has brought out the buyers on Wall Street and done so in dramatic fashion. In fact, after less than an hour's worth of trading, the market is soaring.
Specifically, the Dow Jones Industrial Average is up 180 points, after having topped the 200-point mark a few minutes ago; the NASDAQ is ahead by 49 points; and the Standard and Poor's 500 Index is higher by 19 points. The Russell 2000 Index and the S&P Mid-Cap 400 also are heading nicely forward in this abrupt change in mood on the Street.
Behind this upbeat performance is an across-the-board global pickup in business sentiment. To wit, China this morning has pledged to pursue a more flexible exchange rate for its currency. This is something that the United States and other international players have sought. Moreover,
Closer to home, data issued this morning showed that industrial production had risen by 0.6% in February, a materially better showing than had been expected, and the best gain since last August, Also, factory utilization rose from 78.5% to 78.8% last month. That increase, too, beat out expectations. Finally, a manufacturing survey in New York State also topped expectations.
In all, as we head toward the one-hour mark in New York, the stock market is throwing off the caution of last week and is surging ahead broadly and definitively. - Harvey S. Katz
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 – Corporate news is rather light today, as earnings season is largely over. There was some M&A activity over the weekend, however, with telecommunications company Vodafone (VOD) agreeing to purchase Ono, a Spain-based cable company, for nearly $10 billion. VOD stock is up slightly ahead of the bell, in response. Elsewhere, the board of directors of Sears Holdings (SHLD) has given the green light for the retailer to spin off its Land’s End business, which is scheduled to start trading under the ticker LE in early April. – 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 treaded water for the first three trading days of last week, before undergoing a full-fledged retreat on Thursday, was back to its indecisive ways to conclude the five-day span this past Friday. To wit, after starting the day higher, then reversing course later in the morning to press somewhat lower, the market again changed direction and rose into mid-session, even heading grudgingly higher for a time. However, the key equity averages could not sustain that half-hearted recovery, and softened anew into the close, but not with any real conviction either. In all, after a series of small up-and-down moves, the market essentially closed on a mixed note.
All told, the Dow Jones Industrial Average ended the day with a 43-point loss, with that blue-chip composite having ranged from a gain of some 57 points to a loss of just over 60 points. By recent standards that is a tight band. At the same time, the Standard and Poor's 500 Index lost five points and the NASDAQ shed 15 points. But the S&P Mid-Cap 400 rose four points, while the small-cap dominated Russell 2000 edged up by almost five points. Financial stocks and tech shares were notably lower; meantime, the oils also weakened, although crude prices edged higher. Gold again strengthened and metals stocks gained, in response. Finally, food issues lagged, held in check by weaker guidance from General Mills (GIS).
Behind this latest setback--however contained it was--were the usual suspects, namely worries about Ukraine, China, valuations, and upcoming first-quarter earnings season. Looked at individually, the conflict between Russia and Ukraine remains serious and is unlikely to ease much in the days and weeks ahead, as feelings are raw on both sides and compromise is unlikely, at this time. Then, there is China, which seems once more to be slowing on the economic front. And the impact of such a slowdown could be substantial, given that this emerging giant is now the second largest economy in the world. Also, as the Standard and Poor's 500 Index stalls between 1,800 and 1,900--it had crested thus far at 1,883.57 on an intraday basis--valuation concerns again are being heard. With Friday's setback that broad index is now down at 1,841. Finally, earnings season is fast approaching, and of late there have been any number of warnings. At this point, few expect a big performance this quarter from Corporate America, although it does seem to normally have a way of exceeding modest forecasts.
As to economic news, there was a benign report issued during the morning on producer price inflation, with that metric easing by 0.1%; a small increase had been expected. Also, a consumer sentiment survey issued a bit later in the day suggested a moderate dampening in spirit. The week ahead is busier, however, with a series of reports starting out with this morning's pending release on industrial production and factory usage for February. A flat reading to a small increase is the forecast for each. Then, tomorrow, the Commerce Department will report its findings on housing starts for last month. Here, a modest rebound from a dour January result is the consensus forecast. Then, on Wednesday, the Federal Reserve will conclude its two-day FOMC meeting. A further tapering of its bond-buying program is the expectation. The week of data and meetings then concludes on Thursday with a report on sales of existing homes for February, where a flat reading is the forecast, with data on the leading indicators, and with the weekly report on initial jobless claims.
As to the week ahead, we are seeing some positive action so far on the European front, where the bourses are all nicely higher, following a mixed-to-higher overnight showing in Asia. It seems that so far at least, yesterday's overwhelming vote in Crimea to join Russia has had no effect on the world's equity markets. And, on our shores, the futures are racing ahead, with the S&P 500 Index and the NASDAQ futures up by nine and 19 points, respectively with about an hour to go before the start of the new trading day on Wall Street.
Finally, the West's reaction to the referendum in Crimea is likely to involve some imposition of economic sanctions against Russia. Should the action be limited to such moves, the market might look past it and resume its formidable and now long-in-the-tooth climb to new highs. We shall see. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies involved.