After The Close - The stock market got off to a weak start this morning, but managed to firm up, to a degree, in the afternoon. By the end of the session, the Dow Jones Industrial Average was down 43 points (-0.3%); the broader S&P 500 Index was flat; and the NASDAQ, which advanced nicely in the afternoon, then gave up those gains, ending the session flat, as well. Nonetheless, breadth was still favorable suggesting that the market, as a whole, was stronger than it may have appeared when looking at just the major averages. For example, advancers outnumbered decliners by roughly 2 to 1 on the NYSE. Many of the smaller names did well, as the Russell 2000 showed considerable leadership today. The S&P Midcap Index held up quite well, too.
Many market sectors made progress. The basic materials stocks, many of which have suffered large losses over the past few weeks, put in a strong performance. Notably, the mining and precious metals stocks rebounded sharply. This could reflect higher gold prices, as the recent selloff in this widely-held commodity may have been overdone. The energy stocks were also winners, led higher by the alternative energy companies and the equipment and services stocks. Notably, the price of crude oil was back above the $90-a-barrel mark today, and that likely gave a boost to related equities. The technology sector also made strides, as software makers did well. In contrast, select consumer names were off, along with some of the healthcare and telecom stocks.
Technically, the S&P 500 Index had logged three consecutive daily advances, before being essentially unchanged today. After a small pullback a week ago, it seems the Index may be looking to move higher again. However, improved trading volumes would certainly signal a greater commitment to the rally.
The market showed some relative strength today, even as the economic news was a bit disappointing. Specifically, durable goods orders fell 5.7% in March, which was a sharper decline than had been anticipated. This showing also stands in contrast to the 4.8% rise in orders logged in February. The job market is back in the spotlight tomorrow, as the weekly initial and continuing claims are set to be released.
Investors also got a batch of mixed earnings reports to sift through, and that likely played a greater role in today’s trading. AT&T (T - Free AT&T Stock Report) stock moved lower, after the telecom giant and Dow component put out a disappointing report. While not in the Dow, Apple (AAPL) is also still a leading stock, and can easily move the market. The computer and device maker released better-than-expected quarterly figures. The stock, which is still about 40% off its 52-week high of $705 a share, put in a volatile session, and ultimately ended nominally lower. - Adam Rosner
At the time of this article’s writing the author did not have positions in any of the companies mentioned.
12:15 PM EDT - The major U.S. equity indexes are putting in a mixed showing as we pass the midday hour on the East Coast. This is not overly surprising, as earnings news has been largely mixed (more below). Overall, advancing issues currently hold a lead over decliners on the Big Board, while the opposite holds true on the NASDAQ. The S&P 500 Index is showing a nominal gain, while the Dow Jones Industrial Average and the NASDAQ are modestly weaker in a session in which the indexes have not strayed too far the neutral line. Trading in the small- and mid-cap markets also has shown little bias thus far today.
From a sector perspective, leadership is coming from the basic materials, conglomerates, and energy groups. Conversely, the more-defensive healthcare and consumer staples categories are lagging the broader market. Within the basic materials area, recent laggards U.S. Steel (X), Alcoa (AA - Free Alcoa Stock Report), and Cliff Natural Resources (CLF) are showing some strength.
Meanwhile, the eyes of the investment community are clearly focused on Corporate America today, as a number of notable companies have reported results within the last 24 hours. After the close of trading yesterday, technology behemoth Apple (AAPL) reported mixed results. The iconic company beat both revenue and earnings expectations in the latest quarter, but noted that gross margins came in below expectations. It also lowered its third-quarter revenue and gross margin guidance and said it will return more capital to its shareholders in the coming quarters. After briefly moving higher, shares of Apple are now trading modestly in the red. In addition, to Apple, three Dow-30 companies also have released results. AT&T (T – Free AT&T Stock Report) stock is lower after the telecom giant reported in-line earnings, but missed top-line expectations. Procter & Gamble (PG - Free P&G Stock Report) shares are down sharply after disappointing guidance for the current quarter overshadowed better-than-expected third-quarter profits. Conversely, Boeing (BA - Free Boeing Stock Report) shares are nicely higher after the aerospace giant beat on the bottom line. Other notable reporters included Panera Bread (PNRA), DeVry (DV), Dr Pepper Snapple Group (DPS), Ford Motor (F), Edward Lifesciences (EW), and Yum! Brands (YUM).
In the midst of all the earnings news, we received a report on the U.S. economy. Specifically, Department of Commerce reported that new orders for durable goods fell sharply in March, which was a stark reversal from the downwardly revised gain of 4.3% in February. While the report is not considered a game changer, it does suggest that the economy was slowing as the first-quarter drew to a close. And unfortunately, the trend appears to be continuing in the current quarter. (Investors should note that the initial reading on first-quarter GDP is due out this Friday.)
Meantime, as trading draws to a conclusion on the Continent, the major European bourses are nicely higher. Investors shook off some disappointing economic news from the euro zone—particularly a slide in Germany’s business confidence—instead electing to focus on fairly upbeat earnings results and the possibility that the European Central Bank could cut interest rates at its monetary policy meeting next week. - William G. Ferguson
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 – The earnings floodgates are open. After the market closed yesterday, computer and personal electronics powerhouse Apple (AAPL) released quarterly results, in what was likely the most highly anticipated report of the season. Demand for its devices was strong, but profits fell for the first time in a decade. On the bright side, management raised the quarterly cash dividend and announced a massive increase to its share-repurchase program. All told, the report did not appear to placate investors, and the stock is down modestly in pre-market trading.
Other notable earnings reports are out from three members of the Dow 30, telecommunications giant AT&T (T – Free AT&T Stock Report), household products manufacturer Procter & Gamble (PG – Free Procter & Gamble Stock Report), and aerospace and defense company Boeing (BA – Free Boeing Stock Report). Boeing’s financials garnered a warm reception on Wall Street, and that stock is indicating a nicely higher opening this morning. However, the investment community was not as impressed with results from Procter & Gamble and AT&T, and both of those equities are down ahead of the bell.
Other stocks trending lower in the premarket on earnings news include medical supplies company Edwards Lifesciences (EW), restaurant chain Panera Bread (PNRA), telecommunications equipment company Juniper Networks (JNPR), software developer VMware (VMW), and appliance maker Whirlpool (WHR).
On the other hand, notable stocks moving higher ahead of the bell on earnings news include restaurant operator Yum! Brands (YUM), automaker Ford (F), health insurer WellPoint (WLP), and drugmaker Eli Lilly (LLY). – 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 - It was a tumultuous session on Wall Street yesterday, even by recent standards. To wit, stocks opened the day nicely higher and then ran up to better-than-a one hundred-point gain in the Dow Jones Industrial Average by mid-morning. Then, in the early afternoon, a short-lived hoax on Twitter erased $200 billion in value from the U.S. equity market, as stocks went south in a hurry in a sort of flash crash.
Shortly thereafter, though, the fake tweet, which had claimed that the White House had suffered two explosions and that President Obama had been injured, was found to have been hacked. The market then regrouped and the prior gains and then some were restored very quickly. So, by the close, the averages were mostly at their session highs. All told, the Dow added 152 points; the NASDAQ jumped by 36 points; and the Standard and Poor's 500 Index was better by 16 points.
Helping the market yesterday and, indeed, in recent sessions have been some reassuring earnings reports, which have helped to take some of the sting out of what could best be described as mixed economic survey results in recent weeks. And yesterday, it was DuPont (DD - Free DuPont Stock Report) that helped to underpin the stock market, as that chemicals giant and Dow-30 component saw better earnings power the stock higher by more than 4% on the day. Movie subscription company Netflix (NFLX) also joined the parade, as that high-flyer swung to a profit in the latest quarter and continued to add subscribers. Netflix shares soared in price, jumping by better than 24% on the day. Then, there was the luxury goods retailer Coach (COH), which reported better quarterly share net and raised its dividend. That one-two punch helped the stock gain nearly 10% on the day.
As to the economy, the Commerce Department reported a slight gain in sales on new homes in March, a continuation of the low inventories of unsold properties, and somewhat better pricing. The housing industry is clearly on the way back, and the only question is just how far and how fast this recovery will evolve over the next couple of years. All of this excitement, meanwhile, took place against a continuing difficult backdrop in Europe, where one nation after another is backing down into recession.
Meanwhile, the profit beat continues, with household products maker and Dow-30 component Procter & Gamble (PG - Free Procter & Gamble Stock Report) posting better-than-expected fiscal third-quarter earnings, but guiding lower going forward. That blue chip, not surprisingly, is indicating a lower opening when trading resumes in about a half hour from now. Then, there is aircraft maker and Dow 30-member Boeing (BA - Free Boeing Stock Report). That company put out solid profit metrics, and those shares are indicating a nicely higher opening this morning.
Finally, there is Apple Inc. (AAPL), the iconic tech stalwart, which yesterday after the market closed put out what may well be the biggest earnings result of the current reporting season, when it chimed in with its first profit decline in a decade, but on reasonably positive volume matchups, suggesting that demand for its main products was not waning as some have been fearing. Nevertheless, that stock, which has fallen from $705 a few months ago to yesterday's close of $403.13 a share, is indicating a lower opening this morning in the range of $393 a share. As to economic numbers, the report of note this morning is March durable goods orders. This survey showed a rather large 5.7% decline.
The combination of the Apple earnings disappointment and the weak durable goods orders report are sending the U.S. equity futures mildly into the red, presaging a weaker opening for the U.S. stock market when traders get down to business today. - Harvey S. Katz
At the time of this article’s writing the author did not have positions in any of the companies mentioned.