After The Close - The U.S. equity market, fresh off of last week’s strong showing, in which the Dow Jones Industrial Average and the broader S&P 500 Index once again hit record highs, pressed forward again today, but this time at a more measured pace. With a light day on both the earnings and economic fronts, there was little to derail the bulls, who were still buying equities following a better-than-expect report on the U.S. labor market last Friday. By the closing bell, the NASDAQ, the S&P 500 Index, the small-cap Russell 2000, and the S&P Mid-Cap 400 Index were modestly higher. The Dow 30, which did not stray far from the neutral line, ended the session nominally to the downside. Overall, advancing issues led decliners by comfortable margin on both the Big Board and the NASDAQ.
However, from a sector perspective, the day was mixed. Some leadership came from the financial, energy, basic materials, technology, and industrial sectors. In the financial space, the stock of Bank of America (BAC - Free Bank of America Stock Report) was a standout performer and helped the Dow 30 overcome a subpar showing from shares of International Business Machines (IBM - Free IBM Stock Report). Energy stocks rose, as oil spiked after last week’s positive report on job creation and concerns that Israel’s airstrikes on Syria could threaten oil supplies from the Middle East. The industrial sector was helped by a good showing from the transportation issues, and technology was the beneficiary of solid performances from industry stalwarts Apple (AAPL) and Google (GOOG). Shares of Apple moved higher after a major investment bank raised its price target for the stock. Conversely, the defensive-minded sectors, including, the utilities, healthcare, and telecoms, were lower. But the biggest laggard was the consumer staples group, which was hurt by poor showings from Tyson Foods (TSN) and Sysco (SYY). The stocks of both fell after the two companies reported quarterly results. Specifically, Tyson Foods reported weaker-than expected bottom-line results, while Sysco missed at the top line.
Meantime, the news from the international community was mostly of the economic variety - and for the most part it was encouraging, particularly the reports out of the euro zone. On the positive side were better-than-expected readings on nonmanufacturing activity from Germany, France, Italy, and the overall euro zone. That data more than offset a decline in Spain’s services index. It was also reported today that Italy’s new Prime Minister Enrico Letta plans to discuss the ongoing social unhappiness with Spanish Prime Minster Mariano Rajoy. Those two nations have been struggling with harsh austerity measures put in place following bailout loans to help them avoid defaulting on their sovereign-debt obligations. Germany’s DAX and France’s CAC-40 finished the latest session nominally lower. Likewise, the euro fell versus the dollar after European Central Bank head Mario Draghi suggested the Continent’s lead bank is ready to act, if needed.
Looking ahead, with the week light on economic news—there are no major reports due over the next four trading days—and the first-quarter earnings season quickly drawing to a close, the equity market this week is probably going to trade off of its technical aspects, which continue to strengthen. Thus, it would not come as a surprise if the latest bull run has some short-term staying power even in a market that is clearly overextended. The S&P 500 Volatility Index (or VIX), which finished the latest session below 13, would clearly suggest the buying has overheated. - 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 EDT - The stock market is putting in a slightly stronger performance today, as traders digest the gains logged at the end of last week. Indeed, at just past noon in New York things seem to be firming up. The Dow Jones Industrial Average is up five points; while the broader S&P 500 Index is ahead four points; and the technology-heavy NASDAQ is tacking on 14 points (0.4%). A look at market breadth reveals a slightly favorable showing, as advancers are just ahead of decliners on the NYSE, but the major market sectors are still largely divided. There is leadership in the transports, and participation in this key group is a positive indication. The technology sector is also having a good day, helped by the hardware names. It helps too, that Apple (AAPL) stock is trading higher on an analyst upgrade and Intel (INTC - Free Intel Stock Report) shares are up slightly on some acquisition-related news. Moreover, there is some strength in the financials, as the insurance stocks are up sharply. In contrast, the utilities are off decidedly, along with the consumer non-cyclical issues.
Technically, the S&P 500 Index moved through the 1,600 mark last week, and traders are likely taking a breather, while looking for direction. Notably, the trading volumes accompanying last week’s up moves were a bit light, and greater participation would be encouraging.
There were no major economic reports released this morning and that provides no real catalyst for traders. Tomorrow will also be a light day for economic news. So traders may be inclined to look elsewhere, such as the overseas markets for guidance. Given the lack of stability in Europe, this can often prove difficult.
Meanwhile, first-quarter earnings season is not over yet, and can still supply some needed fuel for the rally. Today, we heard from Tyson Foods (TSN). That issue is trading lower, after the company posted weaker- than-expected revenues and earnings. However, Warren Buffett’s company Berkshire Hathaway (BRK/B) posted impressive results and that issue its moving up, as a result.
Elsewhere, stocks that are moving up in price today include: Arkansas Best Corp. (ABFS), YRC Worldwide (YRC), 3D Systems (DDD), and Federal-Mogul (FDML). Issues moving down in price include: Sanofi-Aventis (SNY), Regeneron (REGN), and Tredegar (TG). - 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 are in the headlines again this morning, highlighted by Berkshire Hathaway (BRK/B), the holding company run by legendary investor Warren Buffett, which released first-quarter results after the market closed on Friday and held its annual shareholder meeting over the weekend. Investors appeared pleased, overall, and Berkshire stock is up modestly in pre-market trading as a result. Shares of Tyson Foods (TSN) received a much chillier reception, however, and are down notably ahead of the bell, after the chicken, beef, and pork processor delivered disappointing March-period results. Likewise, Sysco (SYY) stock is indicating a slightly lower opening this morning, after the leading marketer and distributor of food, equipment, and related products failed to turn heads with its March-quarter results.
Elsewhere, on the M&A front, private-equity firms Bain Capital and Golden Gate Capital are reportedly close to acquiring software developer BMC (BMC) for around $46 a share. The stock has not moved much in the premarket, however, as BMC hired investment bankers several months back to explore strategic alternatives for 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 - Stocks rolled to a strong gain to end the latest week, as the federal government's report on non-farm payroll growth in April and accompanying unemployment survey were somewhat better than expected.
Specifically, at 8:30AM (EDT) on Friday, the Labor Department reported that April saw the economy add 165,000 net new jobs, while the unemployment rate eased to 7.5%. The jobless rate is now at a multi-year low, having dropped by 0.4% since January. Also, non-farm payrolls for February and March were revised significantly higher.
Armed with that upbeat report, and aided as well by a continuing flow of reassuring earnings reports for the first quarter from across Corporate America, the stock market put on another show, with both the Dow Jones Industrial Average and the Standard and Poor's 500 Index rising to all-time highs. The NASDAQ also powered ahead, but that index, a victim to a bursting tech-bubble in 2001 and 2002, is nowhere near an all-time high, but is at its best levels in a number of years.
In all, we start a new week at just under 15,000 on the Dow, after having crossed that psychologically important threshold for the first time ever on Friday. The S&P 500 Index, meanwhile, is sitting above 1,600 for the first time ever, while the NASDAQ, which had crossed 5,000 in 2000, is closing in on 3,400.
Meantime, as the new week starts, the dollar is firmer and crude oil is rising, having jumped above $96 a barrel in New York this morning. Just a week or two ago, oil had backed down into the mid-to-upper $80-a-barrel range in New York. Brent crude is even higher in Europe, after Israel launched air strikes on a Syrian military facility over the weekend. That action, in response to the increasingly troubled situation in the latter war-torn country, has stoked fears about a possible disruption of Middle East oil supplies.
Also helping the equity market now is a perception, which is based on some logical reasoning, that our economy is outperforming the rest of the developed world--most notably Europe--which is largely mired in a recession of some magnitude and likely duration. The strength in this country, which is more comparative than absolute given the generally more sluggish data issued in recent weeks, is attracting investors from around the globe and helping to push our stocks nicely ahead at this time. Recent comments from no less of an authority than Warren Buffett that U.S. equities will go much higher in the long run, are also helping the psyche of U.S. investors.
Meanwhile, a new week will shortly get under way on Wall Street, and it promises to be a notably less busy five-day stretch than the one that just preceded it. Of note, earnings season is rapidly drawing to a close, with data this week largely confined to a few big names, such as food wholesaler Sysco (SYY), electrical equipment mainstay Emerson Electric (EMR), entertainment giant and Dow-30 component, Walt Disney (DIS – Free Disney Stock Report), which has been up strongly in recent weeks, and New York-based utility behemoth Consolidated Edison (ED).
As to this morning, the equity futures appear to be poised for a mixed and altogether lackluster opening in less than an hour from now. – Harvey S. Katz
At the time of this article's writing, the author had positions in DIS.