After the Close - After a volatile morning of trading, in which the major U.S. equity indexes seesawed back and forth around the neutral line, equities righted themselves around the midday hour and then the market pushed modestly higher thereafter and, for the most part, was able to hold onto the second-half gains by the closing bell. It was once again a quiet day on the economic front, so investors turned to the earnings beat and there they received good news from Dow 30 component and home improvement retailer Home Depot (HD - Free Home Depot Stock Report) (more below). When all was said and done, it was another in a long line of productive sessions for the bulls in 2013, but this one did not come without some bumps along the way. The Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index finished 52, six, and three points higher, respectively. The index of 30 bellwether companies today got a big boost from shares of the aforementioned Home Depot and drug company Merck & Co. (MRK - Free Merck Stock Report). Overall, advancing issues modestly led decliners on both the New York Stock Exchange and the NASDAQ, suggesting that there still may have been some apprehension among investors ahead of tomorrow’s news on the economy.
From a sector perspective, it was a relatively even split in the performance among the 10 major groups. Leadership came from the healthcare and consumer discretionary stocks. The performance in the latter area was not surprising, given the strong quarterly results posted by a few prominent retailing companies this morning. As noted, The Home Depot’s April-period results were better than expected, thanks to the ongoing recovery in the housing market. Shares of auto parts retailer AutoZone (AZO) and fashion and apparel retailer Saks (SKS) also were higher on solid quarterly reports. Investors should also note that Dow 30 component Hewlett Packard (HPQ - Free HP Stock Report) is scheduled to release its latest quarterly results after the close of trading tomorrow. Conversely, the financial, technology, and telecommunications sectors were among the laggards. The telecom issues were held back by weakness in the shares of industry leaders AT&T (T – Free AT&T Stock Report) and Verizon Communications (VZ - Free Verizon Stock Report).
Meantime, the investment community will turn its attention from the earnings beat to the U.S. economy tomorrow. Investors will be scrutinizing Federal Reserve Chairman Ben Bernanke’s speech before Congress for clues as to whether the central bank will stay on its current accommodative monetary policy course. Minutes from the last Federal Open Market Committee meeting, which are due at 2:00 P.M. (EDT) tomorrow, will also provide some insight into the Federal Reserve’s thinking. We do warn investors that any hint that the Federal Reserve will take its foot off the pedal with regards to easy monetary policies could spark, at the least, a mild selloff in a market that is clearly overextended. The S&P 500 Volatility Index (or VIX) sits at a level that would suggest such. In addition, to the scheduled Fed news, we will receive the data on existing homes sales for April at 10:00 A.M. (EDT). Then, on Thursday we will get the release on April new home sales, and the week wraps up on Friday with the latest report on durable goods orders.
In addition to the forthcoming economic reports, we will get several more notable earnings releases over the next three trading days, mostly from the retailing space. Home Depot’s main competitor Lowe’s Cos. (LOW) is on the docket this week, along with fellow retailers Aeropostale (ARO), Abercrombie & Fitch (ANF), L Brands (LTD), PetSmart (PETM), The Gap (GPS), Dollar Tree (DLTR), Ralph Lauren (RL), and Williams-Sonoma (WSM). These releases also will provide further insight on whether Americans continue to spend. Earlier this year, concerns grew that the automatic spending cuts and tax hikes would hurt consumers and lead to a pullback in spending on discretionary items. This does not seem to be the case right now, as highlighted by the recent better-than-expected readings on both consumer confidence and sentiment. - William G. Ferguson
At the time of this article’s writing the author did not have positions in any of the companies mentioned.
12:40 PM EDT - The stock market has been quite volatile today. After a higher opening, the major averages pulled back sharply, but have now bounced back with some strength. At just past noon in New York, the Dow Jones Industrial Average is up 55 points (0.4%); the broader S&P 500 Index is ahead about four points (0.3%); and the tech-heavy NASDAQ is tacking on seven points (0.2%). Advancing stocks are about even with declining stocks at the moment. The market sectors are largely divided. There is some leadership in the healthcare and energy issues. In contrast, the consumer names and the utilities are showing weakness today.
Technically, the S&P 500 Index has logged an impressive series of advances lately and may be in need of a pause. The VIX has been stuck at low levels for some time, suggesting traders may have become complacent, resulting in “overbought” conditions. However, it can’t be denied that the market seems to have some underlying strength pushing it higher whenever it pulls back.
Traders may be jittery today as the Federal reserve Chairman Ben Bernanke will speak to Congress tomorrow. Clearly, any sign that the asset purchase program may be slowing down would be of concern to many on Wall Street. There were no material economic reports released this morning. Existing home sales for the month of April are due out tomorrow. On Thursday, we will receive the weekly initial and continuing jobless claims figures, as well as new home sales for April.
There was some corporate news to digest today. In the Dow, shares of J.P. Morgan (JPM - Free J.P. Morgan Stock Report) are trading up on reports that the bank’s CEO Jamie Diamond will likely remain in place with his current role intact. Also, in the blue chip sector, Home Depot (HD - Free Home Depot Stock Report) stock is higher after the company issued a favorable profit report. In the healthcare area, Medtronic (MDT) shares are moving up as the medical device maker posted impressive quarterly sales and profits. Meanwhile, things are not going as well for Carnival (CCL). Shares of the cruise giant are off on a reduced outlook.
Active stocks moving higher in price include: JA Solar Holdings (JASO), Groupon (GRPN), Clearwire Corp. (CLWR), and Genco Shipping (GNK). Stocks headed lower today include: Ford Motor (F), Sunpower (SPWR), and the Medicines Company (MDCO). -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 – April-quarter earnings reports are starting to pour in, mainly from retailers, many of which have fiscal years that end in January. Today’s most notable release comes from The Home Depot (HD – Free Home Depot Stock Report), the world’s largest home-improvement retailer. April-period results were better than expected thanks to the ongoing recovery in the housing market, and the stock is up nicely in the premarket as a result. Other stocks moving higher ahead of the bell on earnings news include high-end retailer Saks (SKS) and Medtronic (MDT), a manufacturer of implantable biomedical devices.
Conversely, shares of apparel and accessories retailer Urban Outfitters (URBN), electronics seller Best Buy (BBY), big box sporting goods retailer Dick’s (DKS), and cruise ship operator Carnival (CCL) are all indicating lower openings this morning on earnings-related news. – 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 took a breather to start the new week, with equities largely marching in place, but with ever-so slightly a bias to the downside. Specifically, yesterday saw an up-and-down session, in which the leading averages marked time before finally edging a bit lower by the close. This uneven pattern followed another series of multiple record highs last week.
Of note, the equity market has been on a joyride in recent weeks, with most groups benefiting from a relatively good recent earnings reporting season. Indeed, many concerns beat expectations at the bottom line, with more than two-thirds of all companies in the Standard and Poor's 500 Index exceeding profit expectations. The lone note of concern was the fact that many of those reporting entities missed their revenue targets. But this has been the pattern for much of this long and venerable bull market, and to this point it has mattered very little, if at all.
Meantime, what we are seeing as the market tracks higher is some group rotation. For example, yesterday, the basic materials and energy stocks rose smartly, while the healthcare and other defensive issues were notable laggards. Of late, it seems as though one day will see strength in the basic materials, industrial, and/or capital goods makers, while the less cyclical areas will falter. The next day this pattern will often reverse itself.
As we stand now, and in spite of the weakness in some drug stocks yesterday, for example, these latter issues have performed quite well so far this year and boast solid gains, in the main. On the other hand, the basic materials stocks, notably the steels and some precious metals providers, have lagged badly and have been among the few issues on the regular new lows list. Yesterday, some good news out of China seemed to provide a lift for the cyclical issues. There were no economic metrics of note on our shores to explain the divergence among the previously noted equity groups.
Today also will see little in the way of economic news, although tomorrow and the rest of the week will see the re-emergence of the economy as a major influence, with respective releases on sales of existing homes and new residences, reports on initial and continuing jobless claims, and data on durable goods orders.
Meanwhile, on Friday, along with durable goods orders, the bond market will get an early start on the Memorial Day holiday by closing at 2PM (EDT), while the stock market will have normal hours. The financial markets will then all be closed on Monday, May 27th to honor those brave men and women who have fought for this country throughout its history.
Finally, the markets around the globe are somewhat mixed so far today, with earlier gains in the London FTSE 100 and prior declines in the Paris CAC-40. And over here, our futures have erased some earlier modest losses and are suggesting a mixed opening, as investors mark time ahead of a much-anticipated statement tomorrow by Federal Reserve Chairman Ben S. Bernanke before the Congress. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.