Loading...
 

After The Close - The first trading day of February was a very good one for those long equities. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index added 149, 37, and 15 points, respectively, and continued the bull-run that was in place for much of January, where there were very few notable setbacks for investors. Driving the major equity indexes higher, which in the process pushed the Dow 30 above the psychologically significant 14,000 mark, was supportive economic news both on these shores and overseas (more below). Overall, advancing issues led decliners by a considerable margin on both the New York Stock Exchange and the NASDAQ, to the tune of more than three-to-one on the former.

From a sector perspective there was a lot to like today, as each of the 10 major groups finished comfortably in positive territory. Leadership came from the basic materials, technology, and industrial stocks. Meantime, the healthcare sector easily overcame a difficult performance by Merck & Co. stock (MRK - Free Merck Stock Report), which fell after the Dow-30 component reported disappointing quarterly results. The Merck loss was somewhat offset by the strong performances from shares of Bristol-Myers Squibb (BMY), Abaxis (ABAX), Pfizer (PFE), and Celgene (CELG). Another sector in the news today was energy, as oil giants ExxonMobil (XOM) and Chevron (CVX) reported their latest quarterly results.

As noted, the global economic news was fairly upbeat and investors took their cues from such tidings. Specifically, improved manufacturing data from China, a better-than-expected manufacturing reading for the U.S. (the best since April, 2012), and a better-than-feared manufacturing survey from the euro zone emboldened investors both on these shores and abroad. We also received a semi-encouraging report on the U.S. Labor market. Although the nation created fewer-than-expected jobs in January and the rate of unemployment ticked up last month, investors were pleased to learn that November’s and December’s jobs creation figures were revised sharply higher. Not surprisingly, the major European bourses and the majority of Asia’s indexes finished nicely higher. The only notable loss—and it was rather small—was recorded by China’s Hang Seng Index.

Looking ahead to next week, the five-day stretch will be light on economic news, with the only notable reports on non-manufacturing (services) activity (Tuesday) and the trade gap (Friday). The non-manufacturing reading is sure to be scrutinized by investors, especially in light of this week’s dour data on consumer confidence, as the consumer accounts for roughly two-thirds of the nation’s economic output. Meantime, although the earnings news will remain heavy next week, it will lack many of the heavy hitters seen over the past fortnight. Investors, though, should note that Walt Disney (DIS - Free Disney Stock Report) will report on Tuesday. Other notable reports will come from CVS Caremark (CVS) and Visa (V). 

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

2:30 PM EST - January was a stellar month for the stock market, with the Dow Jones Industrial Average putting in its best opening-month showing since 1994 and with the Standard and Poor's 500 Index posting its strongest gain since 1997. And, at least if the first five hours of the new month are a harbinger of things to come, February appears intent on outdoing January.

That is because the combination of a comparatively decent employment report for January, sizable upward revisions in job totals for both November and December, and a much better-than-expected showing by the manufacturing sector last month have propelled stocks dramatically forward today.

So, as we approach the final 90 minutes of this new month's initial trading session, we find the Dow ahead by 150 points, the S&P 500 better by 15 points, and the NASDAQ in the black by 38 points. Gainers, meantime, are swamping losers on the Big Board to the tune of a four-to-one ratio and outdistancing them on the NASDAQ by approximately a three-to-one count. Not to be outdone, the S&P Mid-Cap 400 Index is up nine points and the small-cap Russell 2000 Composite is ahead by 10 points.

In launching this latest market surge, the Dow has climbed above 14,000 for the first time since October, 2007, which in many respects seems like a different era entirely, given the equity market and economic upheavals that followed. In fact, at its current perch at 14,010 the Dow is only some 150 points from its all-time peak of 14,164 reached during the ballyhoo days of late-2007. - Harvey S. Katz 

  

12:30 PM EST - The U.S. stock market opened higher this morning and has been able to build its gains, so far. Traders are likely taking direction from today’s economic news. Specifically, non-farm payrolls added 157,000 jobs in January. This showing essentially matched the  figure that many economists had been expecting. More importantly, the figures for December were revised sharply upward to 196,000 and this is encouraging. Meanwhile, the unemployment rate moved up to 7.9% in January, from 7.8% in December. On balance, the January report was somewhat constructive, but not so favorable as to suggest that the Fed’s current monetary policy needs to be tightened anytime soon. Ultimately, that is of great concern to Wall Street.

Moreover, there were a few other reports moving the market higher today. The consumer is feeling better. The University of Michigan’s Consumer Sentiment Index came in with a reading of 73.8 for January, which was better than had been widely expected.  Also the ISM Index registered 53.1 in January, also beating the consensus view.  Finally, construction spending rose 0.9% in December, which was far ahead of the 0.1% logged in November, and better than analyst expectations.

Today’s earnings releases were generally positive. Among Dow components, Exxon Mobil (XOM - Free Exxon Stock Report) put out a decent report, but that stock is weaker on the news. Chevron (CVX Free Chevron Stock Report) posted strong profits and that issue is up on the news. Also in the Dow, Merck (MRK - Free Merck Stock Report) released solid sales and earnings figures, but those shares are down on a cloudy outlook.

As we pass the noon hour in New York, the Dow Jones Industrial Average is up 137 points (1.0%); the S&P 500 Index is higher by 15 points (1.0%); and the tech-heavy NASDAQ is ahead 30 points (1.1%). Market breadth is quite favorable, as advancing stocks are outnumbering decliners by almost  4 to 1 on the NYSE. All of the market sectors are advancing led, higher by the consumer and the basic material stocks. As could be expected, the utilities stocks are lagging the broader market, as investors look for faster-moving issues.

Technically, the S&P 500 Index is back in new high territory, and further above the 1,500 mark. The VIX is down 10% to under 13, and back near its 52-week low, suggesting investors are feeling quite bullish, and possibly even overly so.  - 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 Survey – Three Dow components are set to report December-period earnings this morning, with petroleum producers Exxon Mobil (XOM Free Exxon Stock Report) and Chevron (CVX Free Chevron Stock Report), and drug giant Merck (MRK Free Merck Stock Report) being the trio.

Elsewhere, the Department of Justice has filed suit to block the acquisition of Grupo Modelo, a producer and distributor of alcoholic beverages, by industry peer Anheuser-Busch InBev (BUD), citing reduced competition. Multimedia powerhouse Viacom (VIAB) posted somewhat disappointing fourth-quarter revenues, with declining ad sales largely to blame. – Sharif Abdou

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 closed out a very strong January yesterday with mixed results. To wit, the Dow Jones Industrial Average fell by 50 points on the final day of the month; the Standard and Poor's 500 Index shed four points; and the NASDAQ, pressured by a late selloff, essentially closed the session unchanged. On the other hand, the small- and mid-cap indexes performed nicely, with the S&P 400 Mid-Cap Index gaining four points and the small-cap Russell 2000 Composite rising by five points. Moreover, gaining stocks edged out losers on the Big Board and held sway on the NASDAQ by a solid five-to-three ratio. All in all, it was the best January showing by the Dow since 1994 and the strongest performance by the S&P 500 Index since 1997.

Holding back stocks yesterday was some concern ahead of this morning's employment report issued moments ago by the Labor Department (see below), and a larger-than-expected increase in new filings for unemployment insurance in the latest week. Conversely, we saw some favorable metrics, most notably a big jump in personal income in December and a better showing than forecast by the Chicago-area purchasing managers. Later on this morning, we will get a look at what the purchasing managers have to say about manufacturing activity across the nation. A slight improvement is the expectation for January.

Meantime, as noted, the market is off to a good start this year, with the Dow having jumped by a formidable 5.8% in the just-ended month. The S&P 500, meantime, is up 5.0% thus far, while the NASDAQ is ahead by a more-than-respectable 4.1%. Also, the small-cap Russell 2000 is in the black by an even more formidable 6.2%, while the S&P Mid-Cap 400 is the big winner with a 7.2% first-month increase. A general sense of cautious optimism on the economy, some signs of evolving cooperation in the political arena, and a mostly upbeat performance on the corporate earnings front are combining, we think, to bring about the strong early showing on Wall Street.

Of course, not all the news is good, as we did get some lackluster earnings news yesterday from chemicals giant Dow Chemical (DOW), and that stock fell back in trading. On the other hand, semiconductor maker Qualcomm (QCOM) topped earnings views in the latest quarter and issued upbeat guidance sending that strongly performing issue up nearly 4% yesterday. Overall, the majority of companies are outdistancing their modest profit targets.

Meanwhile, the Labor Department reported moments ago that U.S. non-farm payrolls had risen by 157,000 in January, which was in line with expectations, while the jobless rate ticked up from December's 7.8% rate to 7.9%. A flattish jobless reading had been the expectation. It should be noted, as well, that revisions for November and December revealed that many more jobs were added in both of those months than had been initially estimated. Overall, this much-anticipated report was a non-game changer. As such, the equity futures up solidly before the employment report's issuance, held those gains, suggesting a very strong opening for Wall Street as a new month gets under way in about a half hour from now. - Harvey S. Katz

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