Loading...
 

After The Close - Wall Street continued its merry march today, bolstered by favorable economic data. At the close, the Dow Jones Industrial Average was up 84 points and the NASDAQ had tacked on 14 points. Market breadth was broadly positive, as well. This morning’s government reports, indicating improvement in the labor market and tame underlying inflation, provided a catalyst. 

The session’s smooth sailing was also supported by broadly higher stock markets in Europe and Asia. The quiet tone emanating out of Europe has been a major underpinning to the upturn in place since November. That is in contrast to the unsettling dramatics across the Atlantic in 2010, 2011, and a good part of 2012.

But there is still the potential for some trouble to pierce the recent calm in Europe. European Union leaders today began a two-day summit in Brussels. On the agenda are discussions about a bailout for Cyprus and possible steps to combat high unemployment in southern Europe. Despite the time bought by the European Central Bank’s strong policy stance, something could still go wrong in the euro zone, given the region’s recession and high unemployment. That could rattle the equity markets over here again at some point.

Meanwhile, at the sector level, energy stocks shined brighter than most today. Leading the way was Dow component Chevron (CVX), which offered rosy production guidance at an analyst meeting earlier this week. The group’s relative strength extended to producers, such as Noble Corp. (NE) and services provider Schlumberger (SLB).

Energy stocks were also helped by speculation that activist investors might put more pressure on companies to boost shareholder returns. Drillers, including Hess (HES), Chesapeake Energy (CHK), and SandRidge Energy (SD) have all been so pushed lately. The thinking is that this could occur in other instances where stock price performance has lagged, as at Apache (APA).

At the corporate level, shares of Men’s Wearhouse (MW) were the star of the day, as the retailer indicated that it is exploring the sale of its less profitable K&G operations, which offer lower-priced merchandise.

Tomorrow brings a slew of economic news in the form of the consumer price index for February, plus February data on industrial production and capacity utilization, March’s New York Fed survey on manufacturing, and the University of Michigan’s preliminary consumer sentiment index for March.

Favorable readings are expected across the board, which could provide further support to the now two-week-old winning streak. -Robert Mitkowski

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

-

12:30 EDT - The U.S. stock market opened higher today, as traders received some constructive economic news. Specifically, weekly initial jobless claims for the week ended March 9th, dropped to 332,000 from the prior week’s upwardly revised figure of 342,000. Continuing claims also showed improvement, further supporting the idea that the employment situation is improving. We also got a look at some inflation data. The Producer Price Index (PPI) rose 0.7% in February, which was about as expected. However, the core PPI rose just 0.2%. For now, there is little threat of inflation becoming a problem and it is unlikely that the Fed, having pledged a commitment to its low-interest rate policy and asset purchase program, will act to raise rates anytime soon. 

Tomorrow, we get a look that consumer prices. We also will receive some regional economic data, as the Empire Manufacturing Index, which measures conditions in the New York State region, is slated to be released.

The economic news too was favorable overseas. That helped the markets in Asia, with decent gains on Japan’s Nikkei. Meanwhile, in Europe, the major bourses are closing out a decent session, as well.

As we pass the noon hour in New York, the Dow Jones Industrial Average is up 64 points (0.4%); the S&P 500 is adding on seven points (0.4%); and the NASDAQ is ahead by 11 points (0.4%). Market breadth is mildly favorable, as rising stocks are outnumbering decliners by a small margin on the NYSE. There is strength in the energy and technology names.  However, the basic materials stocks are underperforming the market. Technically, the S&P 500 Index continues to move higher. However, volumes have been a bit light over the past several sessions, suggesting that some traders may be hesitant to commit to the market at this stage of the rally. The next big event for traders, which will likely help determine the market’s direction will be the upcoming first-quarter earnings season.

Elsewhere, in corporate news, a few companies reported results. Men’s Warehouse (MW) is seeing its stock rise sharply after the retail apparel company posted weak results, but announced a share repurchase program and the intent to sell some of its operations.  Also in retail, Buckle (BKE) stock is up, after that company put out a decent report.  - 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 There are only a handful of earnings reports for investors to examine this morning. The big winner appears to be apparel and accessories retailer Men’s Wearhouse (MW). Although the company’s fourth-quarter loss was wider than expected, Wall Street appeared pleased with news that management is considering strategic alternatives for its K&G business. The stock is trading sharply higher in the premarket as a result. Specialty retailer Hot Topic (HOTT) delivered solid January-period results, but that stock is little changed in pre-market trading, likely due to the company’s pending acquisition by private-equity firm Sycamore Partners. Finally, shares of teen apparel retailer The Buckle (BKE) are down slightly ahead of the bell on earnings news.

Elsewhere, the stock of E*Trade Financial (ETFC) is indicating a notably lower opening this morning, after Citadel LLC, the online financial services company’s largest shareholder, announced plans to sell its nearly 10% stake in the company. – 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 bulls are continuing to blaze new trails. For example, yesterday's modest gains made it nine sessions in a row that the Dow Jones Industrial Average had posted a gain. It also was the seventh trading day in succession that this 30-stock composite had hit an all-time high.

To be sure, the market is showing some signs of age and a little wear and tear, as yesterday's gain in the Dow was a mere five points. And that nominal advance followed an increase of less than three points the day before. And these token gains came on a day in which the economic metrics were positive, most notably the report of a 1.1% increase in February retail sales, a figure that overwhelmed the consensus expectation calling for a gain of 0.6%. Moreover, the revised January sales rise of 0.2% was double the initial estimate for that month of 0.1%. In addition, there is news out that housing foreclosures are way down, which is another sign that this critical market is on the mend.

Still, there is no denying that the bull is alive and well, even if the major large-cap averages, which in addition to the Dow did little of note yesterday, are finding it harder and harder to break new ground. On the other hand, the small- and mid-cap indexes plowed ahead, with the Russell 2000 Composite and the Standard and Poor's Mid-Cap 400 each gaining about four points, while advancers easily beat out decliners on both the Big Board and the NASDAQ.

Among the day's winners were the retailers, responding nicely to the outsized gains in retail spending last month. Some individual stocks climbing in this sector were Walgreen (WAG), Best Buy (BBY), and Kohl's (KSS).

As to the day ahead, the Labor Department has just reported, as expected, that the Producer Price Index jumped by 0.7% last month, mostly on higher energy prices. Tomorrow, we will get the companion report on consumer price inflation, also from the Labor Department. A large increase is the expectation there as well. Tomorrow also will see data on industrial production and capacity utilization. Also, this morning, Labor reported a nice decline in weekly jobless claims, with that metric sinking by 10,000 to 332,000. At the same time, continuing claims fell in the latest week, while the average of new claims for the past month dropped to its lowest level in some five years. Clearly, the employment situation is improving.

As to the day ahead, the bourses in Europe are advancing nicely, while our futures are pushing ahead, with the S&P 500 Index gaining four points and the NASDAQ rising by nearly 12 points. – Harvey S. Katz

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