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After the Close - It was a big win for the bulls today in a year that has thus far been rather rewarding to those long equities. As we have opined here several times, our sense is that the lack of alternative options, particularly in the bond market, are keeping investors very interested in stocks even when market measurements would suggest that stocks are clearly overextended. To this end, equities shot up today after the release of minutes from the latest Federal Open Market Committee Meeting showed that the lead bank plans to continue its aggressive bond-buying programs. Such loose monetary policy is keeping interest rates at historical lows and limiting options for investors, with equities the biggest beneficiaries. Not surprisingly, the market moved notable higher on the Federal Reserve release.

At the closing bell, the Dow Jones Industrial Average, the broader S&P 500 Index, and the NASDAQ had added 129, 59, and 19 points, respectively. In the process, the Dow 30 and the S&P 500 hit record intra-day highs. The buying—which was evident in data showing advancing issues leading decliners by more than three-to-one on both the Big Board and the NASDAQ—was pretty encompassing with each of the 10 major sectors, save for the basic materials group, finishing comfortably in positive territory. Leadership came from the consumer staples, financial, industrial, and technology stocks. It was also another good day for the blue chips, with notable gains turned in by the stocks of technology giants, Microsoft (MSFT - Free Microsoft Stock Report), Intel (INTC - Free Intel Stock Report), and Cisco Systems (CSCO Free Cisco Stock Report). The strong showing by the technology issues was also a big reason for the outperformance by the NASDAQ composite, relative to the other major indexes.

As noted, the news that seemed to push the equity markets higher both here and overseas—Germany’s DAX, France’s CAC-40, and Britain’s FTSE-100 Indexes all finished sharply higher—was the Federal Reserve reaffirming its commitment to an aggressive bond-buying program. In recent months, some of the movement by the bears has been prompted by suggestions that the central bank may begin to tighten monetary policies. Clearly that was not the case today—and investors bid stocks higher on the sentiment. Investors may have also taken some comfort in the fact that the number of Federal Reserve governors opposed to such loose monetary policy tactics was smaller than expected. Meantime, it was an otherwise quiet day for news on the U.S. economy. On Friday, we will get data on producer prices and retail sales. The latter report is expected to be closely scrutinized, as the consumer sector accounts for nearly two-thirds of the nation’s economic output. The retail data may well be used as a gauge to how consumers are feeling these days.

Likewise, it was another calm day on the earnings front, but that will change quickly next week as first-quarter earnings season heats up. Of note today was a dour outlook from Health Management Associates (HMA), which weighed on the company’s stock as well as shares of some of the other hospital managers. The stock of Fastenal (FAST) was also lower after the retail building supplies company posted weaker-than-expected sales in the latest quarter. On the other hand, the stock of CarMax (KMX) moved higher after the retailer of used vehicles reported in-line earnings, but beat expectations on the top line.  - William G. Ferguson 

 

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12:00 PM EDT - The stock market opened higher this morning and is now building on these gains.  As we pass the noon hour in New York, the major averages are near their session highs. The Dow Jones Industrial Average is up 124 points (0.9%); the S&P 500 Index is ahead by 16 points (1.0%); and the tech-laden NASDAQ, which is leading the market, is tacking on 50 points (1.6%). There is also a strong showing on the Russell 2000, indicating that the buying is not confined to just the popular names. Market breadth confirms the widespread buying as advancing stocks are ahead of decliners by over 3 to 1 on the NYSE.

There is particular strength in the technology names, as the Philadelphia Semiconductor Index is up almost 2% today. Notably, Micron (MU) is a big gainer there. The financial names are also leading, while the basic materials stocks are a bit weaker on a relative basis.

Technically, the S&P 500 Index is breaking out of a tight range and into new high ground. Volumes, although still light, improved yesterday, which is a welcome sign. Hopefully, traders will follow through today, with further buying of stocks into the afternoon. Sentiment is still likely bullish, as the VIX is lower by almost 4% today, to just over 12.

Traders were likely enthusiastic about the economic news released this morning. Specifically, the minutes from the FOMC’s March meeting were released a bit ahead of schedule. The key point for traders was the suggestion that the current program of asset purchases will likely continue for a while, and that there may be less disagreement within the FOMC over the current policy as may have been feared. Tomorrow will be a busier day for economic news, as the weekly initial and continuing jobless claims are due out. We have seen some weaker-than-expected employment figures lately, so traders will likely be paying attention to these releases. Ironically, the fact that the economy is not recovering too fast may also be fueling the idea that the Fed will continue its accommodative stance.

Although Alcoa (AA - Free Alcoa Stock Report) kicked off the first-quarter earnings season late on Monday, the corporate releases have been minimal today. However, Family Dollar (FDO) stock was lower, but has recovered, after the retailer posted weaker-than-anticipated quarterly profits. Things went better for ADTRAN (ADTN), as that issue is trading higher, after the company put out a solid report.   - Adam Rosner

At the time of this article's writing, the author had a position in Alcoa (AA).

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11:15 AM EDT  - The stock market is gaining steam this morning, with considerable strength on the NASDAQ. Further, today’s push higher also has taken the S&P 500 Index into new record-high territory, which is likely encouraging to traders.  There is considerable strength in the technology and financial issues. However, there is some weakness in the basic materials sector, which is understandable after yesterday’s banner performance. Traders may be reacting positively to the release of the minutes from the FOMC March meeting. The general sense is that the loose monetary policy will continue for some time.  - 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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Stocks to Watch from The Survey There is some earnings news out today, primarily from retailers. Investors were generally unimpressed, however, and shares of used car dealer CarMax (KMX), discount store operator Family Dollar (FDO), and retail building supply company Fastenal (FAST) are all indicating lower openings this morning. Investors also took issue with February-period results from wine, beer, and spirits company Constellation Brands (STZ), and that stock down slightly ahead of the bell. The biggest decliner appears to be shares of Health Management Associates (HMA), which is trading sharply lower in the premarket, after the hospital operator cut its first-quarter and full-year 2013 outlook. The news also seems to be weighing on shares of other hospital managers, such as Tenet Healthcare (THC). – Matthew E. Spencer

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

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Before The Bell - The bulls made it two winning sessions in a row yesterday, as those stock market optimists managed to overcome a sloppy opening to end the session nicely in the black, especially for the larger-cap indexes.

Specifically, after a hesitant start, as investors went back and forth on the latest quarterly metrics from aluminum giant and Dow-30 component Alcoa (AAFree Alcoa Stock Report), the bulls took control, pushing the Dow up 60 points, after a mid-session gain for that blue chip index of just over 100 points. In the process, the Dow set another all-time high, as did the Standard and Poor's 500 Index, which ended the day with a gain of almost six points. However, the good news did not extend to Alcoa shares, which ended flat on the day, after being in the red for much of the session. Also moving higher yesterday was the NASDAQ, with that tech-heavy composite climbing 16 points. But elsewhere, things were not as cheery, as the S&P Mid-Cap 400 was virtually unchanged on the day, while the small-cap Russell 2000 shed a couple of points.

The continuing rally represents, according to some pundits, the inability of investors to find attractive alternatives to equities. That is because with interest rates so low, the desire for fixed-income securities is largely absent, save for the most conservative among the investing crowd. There also is real estate; but investors in that sector were burned so badly several years back that many are just now tip toeing back into that sector for the time being, although the trends in housing construction, home sales, and pricing are almost universally favorable.

For now, though, investors are cheering the perception that the U.S. economy will largely prosper in the year ahead, even as Europe struggles. In fact, that presumptive business strength should allow corporate earnings, which soon will be out en masse for the first quarter, to be pleasantly surprising.

That said, all the profit and corporate news is not uplifting, as a key management departure at struggling retailer J.C. Penney (JCP) helped to push that stock markedly lower yesterday. That issue is now trading at a 52-week closing low of $13.93 a share. It is also indicated to start the current session in the red, albeit nominally. In addition to J.C. Penney shares, which tumbled more than 12% yesterday, the bears were out in force at plastics compounds maker A. Schulman (SHLM), on lowered guidance.

As to the day ahead, there are no economic releases of note, but the Federal Reserve will release the minutes from its last FOMC meeting later today. No market moving thoughts are likely there. Also earnings releases will be sparse, as will be the case again tomorrow. In that setting, what little news there is will be scrutinized very carefully.

Finally, the markets are pushing ahead strongly in Europe this morning, on the heels of yesterday's gains in New York, with the London FTSE 100, the Paris CAC-40, and the Frankfurt DAX all up about one percent. And over here, the S&P, Dow, and NASDAQ futures are all in the plus column, presaging a nicely higher opening at the start of the trading day, which gets under way in less than an hour from now.

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