After The Close - It was another winning week for stocks on Wall Street, which has been the norm rather than the exception for much of 2013 to date. The latest five-day market gains seemed to be more technically driven than the result of improving fundamentals, as it was, for the most part, a rather quiet week on both the economic and earnings fronts. For the five-day stretch, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were up 1.0%, 1.7%, and 1.2%, respectively, with the Dow 30 and the broader S&P 500 hitting all-time highs along the way. The outperformance by the NASDAQ was primarily driven by solid showings from the technology and financial sectors (more below).
Today’s equity market performance was mostly positive. The Dow 30 was lower for most of the session before a late buying burst lifted the index 36 points. But the S&P 500, the NASDAQ and the small-cap Russell 2000 were higher for most of the day—more so the latter two composites. Overall, advancing issues led decliners on both the Big Board and the NASDAQ, and most of the 10 major sectors finished in the plus column. Technology was able to overcome a mildly weaker showing from the stock of industry behemoth Apple (AAPL). A positive account from fellow industry stalwart Google (GOOG), along with gains in the shares of the chipmakers, helped offset the impact of the Apple retreat. The chipmaking issues got a boost from the stock of NVIDIA (NVDA), which rose after the technology company beat expectations at both the top and the bottom line.
Meanwhile, it was not a day to remember for those with stakes in the basic materials and energy sectors. Equities in both groups were hurt by the performance of the commodities markets, which suffered as the value of the U.S. dollar against a basket of foreign currencies, most notably the euro, appreciated. At one point during the session, the dollar index hit a new high. Energy stocks, particularly those of the oil and gas refiners, were weaker, as the price of crude oil fell 0.5% on the New York Mercantile Exchange. The precious metals, which played a big role in the weakness of some basic materials stocks, were hurt by the continued sharp drop in the price of gold. Indeed, May gold contracts fell by more than $27 an ounce in the latest session.
The news from Corporate America was mostly encouraging today. In addition to the aforementioned NVIDIA report, priceline.com (PCLN) posted better-than-expected earnings. However, the online retailer wasn't as optimistic about the current period and cut its second-quarter earnings guidance—and the stock fell accordingly. In non-earnings news, shares of The Gap (GPS) rose after the clothing retailer posted better-than-expected comparable-store sales. Looking ahead to next week, we will get the latest quarterly results from Dow-30 components Cisco Systems (CSCO) and Wal-Mart (WMT). Investors should also note that department store chains Macy’s (M), Nordstrom (JWN), J.C. Penney (JCP), and Kohl’s (KSS) also are scheduled to release their quarterly results.
Meantime, the economic news will pick up considerably, beginning with the latest data on retail sales, which are due out before the commencement of trading on Monday. The remainder of the week will bring reports on producer prices and industrial production (Wednesday), consumer prices and housing starts (Thursday), and the leading indicators (Friday). The economic data are expected to be closely monitored, especially with first-quarter earnings season drawing to a close. Our sense is that, at the very least, decent economic news will be needed if the bulls are to continue on their merry way. Any considerable misses on the economic beat could prompt some profit taking in a market that is clearly overbought. The S&P 500 Volatility Index (or VIX) finished this week below 13, a level that suggests such is the case. -William G. Ferguson
At the time of this article's writing, the author did not have positions in any of the comapneis mentioned.
12:15 PM EDT - The stock market put in a mixed showing this morning. At just past noon in New York, the Dow Jones Industrial Average, which has been crossing in and out of positive territory, is now off 31 points (-0.2%); the broader S&P 500 Index is off a point; and, the tech-heavy NASDAQ, which is again showing some leadership, is tacking on 10 points (0.3%). Market breadth indicates a mildly positive tone to the session, as advancing stocks are ahead of decliners by a narrow margin on the NYSE. Many market sectors are making progress, which is a good indication. There are gains in the in the consumer cyclical names. Further, the healthcare issues are having a good day. In contrast, there is some weakness in the basic materials and energy sectors. This may have to do with lower crude oil and gold prices today. Technically, the S&P 500 Index has had a good run over the past several weeks, so some restrained trading or consolidation here would not be surprising, especially now that the first-quarter earnings season is coming to a close.
The market in the U.S. may be getting some help from trading overseas. Specifically, Japan’s Nikkei jumped almost 3% overnight. Some favorable economic news in Japan, a decline in the Yen, and hopes of further stimulus measures may be behind the move. In Europe, the bourses are putting in a decent session, too.
Meantime, back on our shores, traders received no notable economic reports today. That often can lead to directionless trading, sending investors looking to corporate reports or overseas for guidance. Next week kicks off with a somewhat busy Monday, as retail sales for April and business inventories for March are due out. On Tuesday, we get a look at import and export prices for the month of April.
There were a few earnings reports released today that bear mentioning. Priceline.com (PCLN) is seeing its stock head higher after the Internet company put out a solid report. In technology, Universal Display (PANL) reported weaker-than-expected quarterly results, but reaffirmed guidance. However, “Wall Street” was not impressed, as the issue is trading sharply lower on the news.
Finally, actively traded stocks heading higher in price include: Molycorp, Inc. (MCP), Tesla Motors (TSLA), and True Religion (TRLG). Issues trading lower include: Apple (AAPL), Eog Resources (EOG), and Herbalife (HLF). - 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 reports are still flowing in, albeit at a slower pace than in recent days, and investors are going over some disappointing releases this morning. Indeed, shares of online travel agency priceline.com (PCLN) and clinical information systems vendor Allscripts Healthcare Solutions (MDRX) are both down ahead of the bell. On a brighter note, shares of steel manufacturer ArcelorMittal (MT) and apparel retailer The Gap (GPS) are indicating higher openings this morning on earnings-related news.
Elsewhere, on the M&A front, computer maker Dell (DELL) has received a buyout offer from noted investor Carl Icahn, which competes with the proposal already on the table from company founder Michael Dell and private-equity firm Silver Lake Partners. Dell stock is up slightly in the premarket as a result. – 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 stock market experienced some rare profit taking yesterday. However, the extent of that pullback was limited, with the major averages easing just modestly on the session.
In fact, even after the 23-point setback in the Dow Jones Industrial Average, that index remains comfortably above the 15,000 mark. That was a level that had been just surmounted the day before. The Standard and Poor's 500 Index, which had posted gains for five days in succession, and also reached an all-time high in the process, edged lower by just six points. But that index also stayed above a psychologically important level, in this case 1,600. The NASDAQ, meantime, gave back just four points, remaining above 3,400 in the process. Unlike the other two averages, however, the NASDAQ remains well below the all-time highs it had reached during the frenetic dot.com bubble of 2000.
This mostly encouraging week for the bulls has been achieved with minimal help from the economy, as data have been few and far between, with just reports on initial and continuing jobless claims stepping into the void yesterday. That issuance, released an hour before the stock market opened, was rather positive, with new claims falling to 323,000 in the latest seven-day stretch, the lowest level in more than five years. The data are suggestive of a labor market that is gradually, if only modestly, getting better after years of largely being a non-participant in the maturing business recovery.
However, that limited sampling of economic news failed to boost the bulls yesterday, as the market appeared to take a needed, and very constructive break, after weeks of steady gains. U.S. stocks have been helped by better performances around the globe. In truth, though, with yields on fixed-income instruments as low as they are, there is little else for investors to do save for buying stocks. Real estate, a perceived safe haven for enterprising investors earlier in this young century, is only now getting back on its feet after an historic collapse. And many current buyers of property are largely limiting their purchases to primary and secondary homes. Broad-based buying for investment is still in its very early stages here, and recently richer real estate prices are also keeping some speculators away from this market.
Meanwhile, the economic beat is quiet again today, but the markets are pressing forward overseas, with Japan's Nikkei up almost three percent overnight, while the Hang Sang pressed higher by nearly a percentage point. And in Europe, the London FTSE 100, the Paris CAC-40, and the Frankfurt DAX are all up by between a quarter and a half a percentage point now.
Finally, our futures are ahead by about a point on the S&P 500 and by more than four points on the NASDAQ, presaging a modestly firmer opening on Wall Street when the traders and investors get down to business in less than an hour from now. Given the rather upbeat sentiment in the markets at present, the early strength could well be sustained today, making for a solid end to a very strong week. Stay tuned. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.