After The Close - The bulls were able to build off yesterday’s strong showing with another very convincing performance today. Boosting equities in recent days have been some supportive economic data and what many are terming the “Bernanke Effect”. Specifically, investors were pleased to hear the Federal Reserve Chairman plans to continue the central bank’s accommodative monetary policy (more below), which is historically viewed favorably by market participants. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were up 175, 33, and 19 points, respectively, with the index of 30 bellwether companies and the broader S&P 500 Index once again finishing above the psychologically significant 14,000 and 1,500 levels. Overall, advancing issues far outpaced decliners on both the Big Board and the NASDAQ.

The buying was broadbased in the latest session, with each of the 10 major sectors comfortably in positive territory. Leadership was shown by those sectors that are most closely tied to the performance of the economy, including the industrial, energy, financial, and basic materials stocks. Within the industrial sector, the stocks of the railroad, construction, and agricultural machinery companies were very much in favor among investors. Recent economic data, including yesterday’s good reports on consumer confidence and new home sales, have been very supportive to equities. Today, the investment was pleased to learn that a gauge of planned U.S. business spending in January recorded its largest increase in more than a year and pending home sales neared a three-year high last month. Still...

The biggest impact on today’s outperformance came from comments by Federal Reserve Chairman Ben Bernanke. The Fed Chairman before a Congressional committee said the lead bank plans to continue its accommodative monetary policy to jump start the nation’s pedestrian pace of economic growth. The central bank has been aggressively buying bonds to keep interest rates low in order to promote growth and bring down the stubbornly high unemployment rate. Just last week, equities sold off after minutes from the Fed's January meeting raised questions about whether the central bank may slow or halt its economy-stimulating measures soon.

Speaking of the economy, we will get several more important reports over the next few days. Tomorrow will bring the latest revision to the fourth-quarter GDP data, which many economists’ now expect to show a small advance after last week’s better-than-anticipated report on the trade gap. Then, on Friday, we will receive data on personal income and spending, consumer sentiment, vehicle sales, and manufacturing activity.

On the earnings front, most of the news was supportive to the market, with the highlights coming from the retailing space. Shares of Dollar Tree (DLTR) and TJX Cos. (TJX) moved higher after both retailers reported higher-than-expected quarterly profits. Meantime, the stock of Target (TGT) slipped after the giant discount retailer reported in-line fourth-quarter results, but issued a cautious outlook for the year ahead.  Nevertheless, with nearly all of the earnings data in for the latest quarter, about 70% of the S&P 500 Index companies have beaten profit expectations. That is notably higher than the historical norm.   - William G. Ferguson

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


12:30 PM EST - The U.S. stock market is making strong progress today. The move largely reflects decent economic data, and further hopes that the Fed will keep its favorable monetary policies in place. At just past noon in New York, the Dow Jones Industrial Average is up 106 points (0.8%). In the large-cap average, shares of JPMorgan Chase (JPM Free JPMorgan Stock Report) are trading notably higher, while technology giant Hewlett-Packard (HPQ Free HP Stock Report) stock is showing some weakness. Elsewhere, the S&P 500 Index is up about 13 points (0.9%), and the technology-heavy NASDAQ is leading the pack up 31 points (1.0%). Market breadth suggests a widespread accumulation of equities, as rising stocks are outnumbering falling issues by about 3 to 1 on the NYSE. The figures are equally favorable on the NASDAQ, too.  All of the market sectors are making positive contributions, with leadership in the transports and capital goods issues. Although still in positive territory, there is some relative underperformance in the consumer non-cyclical names.

Technically, the S&P 500 Index has moved back above the key 1,500 level, which is encouraging. The market has been consolidating lately, and this is most apparent when looking at the Dow Jones Industrial Average. That key index has been moving sideways for most of the month of February, testing resistance at 14,000 level. Clearly the bulls have become a bit fatigued, and may be in need of a rest. Nonetheless, the market has not staged a large-scale pullback, so far, and that may have to do with the fact that the U.S. economy, specifically the housing market, is showing signs of a sustained recovery; corporate profits have been decent; and interest rates are quite low, offering little alternative in the fixed-income department. Notably, the VIX, which is also known as Wall Street’s fear gauge is down about 12% to just below 15, which shows notable bullish sentiment.

Meanwhile, the economic news put out today was largely constructive. Durable goods orders slipped 5.2% in January, following December’s 3.7% increase. But, the figures were bit deceiving, as the showing looked much better when transportation is excluded.  Meanwhile, the housing market continues to show progress. Pending home sales rose 4.5% in February, which was well ahead of the consensus.

Traders received a few earnings releases worth noting today. Specifically, Target (TGT) shares are weak, after the company issued a cautious outlook. Things went better for Dollar Tree (DLTR). That stock is higher, after the retailer posted strong quarterly results. - 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 Earnings reports from retailers are in the headlines again today. Indeed, shares of general merchandise retailer Target (TGT) and The TJX Companies (TJX), which operatres T.J. Maxx and Marshalls, are both trading lower in the premarket on earnings news. Conversely, investors appeared pleased with January-period results from discount retailer Dollar Tree (DLTR), and that stock is indicating a nicely higher opening. Other equities making notable moves in the premarket on earnings news include online travel company Priceline.com (PCLN), which is up ahead of the bell, and solar panel designer and manufacturer First Solar (FSLR), which is down sharply. – 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 bull came roaring back yesterday following a strong move by the bears on Monday. To be sure, the latest thrust forward by the perennial stock market optimists was not nearly as strong as the prior day's downdraft had been. Still, for those fretting about an overbought equity market being overdue for a correction, this latest move higher was certainly welcome and reassuring.

All told, the Dow Jones Industrial Average, which had plummeted by 216 points on Monday, regained all but a hundred points of that move lower, although the rest of the market was not nearly as strong, with the NASDAQ, for example gaining just 13 points, after a decline of several times that magnitude during the previous session. Still, the comeback, whatever the overall magnitude, was certainly welcome, and, as suggested above, likely was reassuring and increased the confidence of the bulls going forward.

Behind this reversal was a clear indication from the Federal Reserve Chairman, Ben S. Bernanke, that the central bank remained wedded to its program of bond buying so as to stimulate a still-struggling domestic economy. True, the nation's GDP, which dipped by a scant 0.1% in the initial reading for the fourth quarter, is likely to be revised higher in data to be issued tomorrow morning. Even so, the economy is still unlikely to press forward vigorously anytime soon. Thus, the Fed Chairman's acknowledgement that the bank planned to press ahead with its bond buying efforts, in testimony before Congress, helped to reassure the bulls, who had been shaken earlier by comments made by some Board members at the last FOMC meeting that the time for such aggressive stimulus was past.

In addition to the Fed, the market also was buoyed by a pair of upbeat economic reports. Specifically, the Conference Board, a New York City-based research group reported that its survey on Consumer Confidence had surged in February, rising from January's 58.4 reading to a solid 69.6 in the fast-concluding month. At the same time, the U.S. Commerce Department reported that sales of new homes had soared to a seasonally adjusted 437,000 units on an annualized basis in January. That was notably higher than the upwardly revised reading of 378,000 homes sold in December. (Initially, the December reading had been 369,000 homes sold on an annualized basis.) Also, yesterday, the Case-Shiller home-price index rose by a solid 0.9% for the 20-city composite in December. That was nearly twice the gain that had been expected.

Armed with these upbeat metrics, and looking past Europe's further weak performance on fears about Italy's recent inconclusive election results, our markets rallied nicely. In Europe, by comparison, the bourses fell rather sharply, with Italy's key index falling by almost 5%. As for our market, the Dow also was helped appreciably by a near-$4.00 gain in the shares of building materials retailer Home Depot (HDFree Home Depot Stock Report). That stock was boosted by better-than-expected quarterly earnings, an announced share buyback, and an increase in the dividend. Also, outside the Dow, shares of retailer Macy's (M) rose solidly on better earnings and an upbeat forecast.

Now, looking ahead, the government has just issued data on durable goods orders and, as expected, these orders for longlived goods retreated sharply in January, falling by 5.2%. However, if we back out orders for transportation equipment, notably high-priced aircraft, we find that such orders actually rose by 1.9% last month. This is a notoriously volatile series, and is rarely focused on materially by Wall Street.

All told, after yesterday's comeback session, the markets are indicating a mixed opening on our shores, following a rebound across the sea earlier this morning.

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