After The Close - Most stocks rose again today in what has been an impressive display of bullish momentum in 2013, although a downward draft in some notable tech names held back the advance. Coming into the just-ended session, the Dow Jones Industrial Average had risen 13% in a little over three months, and the Dow Transports and Dow Utilities had posted even more substantial gains. It doesn’t get much better than that.
Helping this morning’s trading was a generally favorable backdrop. Stocks in Europe and Asia were higher and this week’s initial unemployment claims number stateside came in lower than expected.
However, a report that showed sharply lower sales of personal computers weighed on sentiment toward companies with sizable exposure to PCs, such as Microsoft (MSFT - Free Microsoft Stock Report), Intel (INTC - Free Intel Stock Report), and Hewlett-Packard (HPQ - Free Hewlett-Packard Stock Report). All three are Dow-30 components. In truth, the report simply put an exclamation point to what the public knows instinctively, which is that tablets and smartphones have become much more popular that the traditional PC.
Investors also largely shook off word that several retailers weren’t selling much spring apparel during a cold spell as the seasons changed.
At the end of the day, the Dow Industrials added 63 points to close at another all-time high, although the NASDAQ’s added only a couple of points, owing to the weakness in tech. The number of gainers easily outpaced declining issues on the New York Stock Exchange, but the NASDAQ saw slightly more stocks fall than rise.
Among the various sectors, consumer cyclical stocks led the way, with shares of footwear makers NIKE (NKE) and Brown Shoe (BWS) turning in solid performances. Auto manufacturer Toyota Motors’ (TM) American Depository Receipts also moved up nicely on a percentage basis
Healthcare stocks shined, too, including those of Dow component Pfizer (PFE - Free Pfizer Stock Report) and Gilead Sciences (GILD).
At the corporate level, shares of Rite-Aid (RAD) jumped when the drug store chain disclosed that it had posted its first annual profit in a number of years. Another winner was the stock of Occidental Petroleum (OXY), where shareholder activism seemed to provide a lift, even on a day when oil prices fell modestly.
Tomorrow brings more hurdles to clear if the market is to continue its advance. Several important economic reports are on tap, namely the Producer Price Index for February; retail sales for March; a preliminary reading on the University of Michigan consumer sentiment index for April; and Business inventories for February.
Earnings season also picks up the pace, with big banks JPMorgan Chase (JPM - Free JPMorgan Stock Report) and Wells Fargo (WFC) in the on-deck circle. - Robert Mitkowski
At the time of this writing, the author did not have any positions in the companies mentioned.
12:30 PM EDT - The stock market is rising again today, lining up for a four-day consecutive winning streak. Technically, the S&P 500 Index has broken out into new high ground, and now establishing this level, or even moving higher, is of paramount importance. Notably, in early April the index made a stab at a breakout, but retreated. Volumes were healthy yesterday, which is constructive. Once again, looking for follow through on the part of traders later today is going to be crucial. As we pass the noon hour in New York, the major market averages are, however, retreating from their session highs. The Dow Jones Industrial Average is up 49 points (0.3%); the S&P 500 Index is up five points (0.3%); and the tech-laden NASDAQ is tacking on one point. Market breadth is favorable, with advancing stocks are ahead of decliners by about 2 to 1 on the NYSE.
There is considerable strength in the consumer cyclical names. The auto stocks, such as General Motors (GM), are up sharply. The healthcare stocks, and the biotechnology names, in particular, are also leading. However, the technology stocks are weaker today.
Specifically, shares of companies involved in the manufacture and sale of personal computers and related software are showing widespread weakness, after two separate market researchers, IDC and Gartner (IT), issued reports saying that PC shipments fell sharply year to year in the first quarter. According to these firms, the decline was the worst in many years. Investors reacted to the news quickly, bidding down shares of companies with exposure to the PC market, including heavyweights like computer maker Hewlett-Packard (HPQ – Free Hewlett-Packard Stock Report), software giant Microsoft (MSFT – Free Microsoft Stock Report), and chip developer and manufacturer Intel (INTC – Free Intel Stock Report).
There was plenty of blame to go around for the steep drop in shipments, but a general shift away from desktop and laptop computers toward tablets and smartphones appears to be the largest factor behind the weak demand. With telecommunications companies upgrading their networks and wi-fi seemingly all around, consumers are clearly showing a preference for small, portable gadgets, such as Apple’s (AAPL) iPhone and iPad or devices running Google’s (GOOG) Android software. Additionally, Microsoft’s latest version of its signature operating system, Windows 8, has struggled to gain traction amongst both consumers and businesses. Indeed, the new software does not seem to be enough of a factor for people to upgrade their older PCs, either for personal or professional use.
Meanwhile, the economic news released this morning was constructive. Specifically, the employment situation looks a bit better, which is likely a relief to traders that were disappointed by the last monthly employment report. Initial jobless claims for the week ended April 6th, came in at 346,000 which was better than consensus forecasts, and also lower than the prior week’s upwardly revised 388,000 figure. Tomorrow, we get a look at retail sales figures for March, as well as the Producer Price Index. In addition, the University of Michigan’s consumer sentiment report for April is due out.
The earnings season is picking up. JPMorgan (JPM – Free JPMorgan Stock Report) is slated to release results tomorrow. For today, Bed Bath & Beyond (BBBY) stock is higher, as the retailer’s earnings matched expectations. But, YUM! Brands (YUM) stock is mixed on a weak March sales report. Also in retail, Pier One (PIR) stock was trading lower, but has since recovered as that company issued weak guidance. - 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 – Retailers are in the spotlight this morning, as a few companies have reported earnings, while others have released same-store sales figures for the month of March. On the earnings front, investors appeared reasonably pleased with February-period results from home goods retailer Bed Bath & Beyond (BBBY), and that stock is up modestly in pre-market trading. Wall Street was even more impressed with drug store operator Rite Aid (RAD), and that equity is indicating a sharply higher opening this morning. On the other hand, shares of home furnishings retailer Pier 1 Imports (PIR) are down ahead of the bell on earnings news. Turning to March sales, the big winner appears to be action-sports related clothing and equipment retailer Zumiez (ZUMZ), which delivered better-than-expected figures, causing investors to bid the stock sharply higher in the premarket. Shares of Victoria’s Secret parent L Brands (LTD) and off-price retailer Ross Stores (ROST) are also showing strength ahead of the bell, while the stock of discount store operator TJX Companies (TJX) is declining.
Elsewhere, shares of companies involved in the manufacture and sale of personal computers are showing widespread weakness in the premarket, after market researcher IDC issued a report saying that PC shipments fell sharply year to year in the first quarter. Of note, shares of Hewlett-Packard (HPQ – Free Hewlett-Packard Stock Report) and Microsoft (MSFT –Free Microsoft Stock Report) are down sharply ahead of the bell. – 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 - A fully supportive issuance from the Federal Reserve early yesterday morning helped to spark a strong bullish run on Wall Street, in the latest session, as the leading averages all pressed to yearly highs, while the Dow Jones Industrial Average and the Standard and Poor's 500 Index climbed to all-time peaks.
Specifically, yesterday morning, the Federal Reserve issued the minutes from its most recent Federal Open Market Committee meeting. That release, issued hours before it had been scheduled to be made public, essentially affirmed that the central bank was reinforcing the idea that it would remain committed to supporting the economy with a loose monetary policy. As noted, there were no surprises here, just the reaffirmation of the expected. But that was enough to satisfy the bulls, who had been chastened for a brief time last Friday after the issuance of downbeat data on job creation.
However, the Friday shakeup lasted just a few hours and stocks have been on a roll ever since. All told, after yesterday's 129-point rise in the Dow, that 30-stock composite has climbed almost 190 points in two days. The S&P, meantime, added 19 points yesterday. But the star of the session was clearly the tech-heavy NASDAQ, which soared 59 points, led by stellar gains in such old-line tech favorites as Cisco Systems (CSCO – Free Cisco Stock Report), Intel (INTC – Free Intel Stock Report), and Microsoft (MSFT – Free Microsoft Stock Report).
The focus on the Fed is understandable, as there has been some evidence in recent weeks that the economy may be slowing down as we move into the second quarter. In addition to the weak payroll figures, the Institute for Supply Management, a trade group, had issued surveys earlier this month showing that gains in manufacturing and non-manufacturing were slipping somewhat. Add those reports to what is likely to be a slight decline in retail sales for March (that data will be issued tomorrow morning), and there could well have been some skittishness evolving among traders. However, the Fed seems to have calmed investors' nerves to a degree by the support shown in the aforementioned minutes.
There also is some optimism, apparently, regarding the pending release of first-quarter earnings by much of Corporate America over the next several weeks. Thus far, the lone report to be issued for the Dow-30 components has been that of Alcoa (AA – Free Alcoa Stock Report). That profit issuance, which was generally perceived as positive by Wall Street, has helped stocks in the two days since its release, but done nothing for Alcoa, which fell back a little yesterday, in spite of the overall market strength.
As for the day ahead, the principal bourses were mixed overnight in Asia, are up somewhat in Europe, and are mixed on our shores, with the S&P futures up nominally and the NASDAQ futures off by more than six points on bearish brokerage house comments about personal computers.
Finally, in economic news, the Labor Department has issued upbeat metrics on jobless claims within the past half hour, with the latest weekly survey noting that such layoffs had fallen sharply in the latest seven-day stretch, going from 388,000 to 346,000. That data should help take a bit of the edge off of the bearish tech talk so far today. – Harvey S. Katz
At the time of the article's writing, the author had positions in CSCO and INTC.