After the Close - The stock market moved higher again today, following through on yesterday’ advance. At the close, the Dow Jones Industrial Average finished up 108 points; the broader S&P 500 Index had advanced 10 points; and the technology-heavy NASDAQ, which displayed some leadership, ended up 32 points. Market breadth showed solid support for equities, as advancing stocks outnumbered decliners by about two to one on both the NYSE and the NASDAQ. Most of the market sectors made strides, with leadership in the technology area once again. The financial stocks also staged a solid advance, helped by gains in the large banks. Nonetheless, there were some pockets of weakness in the market, too. Some of the consumer names slipped, with the retailers lagging. Also, the high-yielding utilities declined a bit.
Technically, with yesterday’s move higher, and continued strength today, the S&P 500 Index is staging a decent rally attempt. Notably, volumes were strong yesterday, and that suggests things are heating up. Today’s move takes the broad-based index back near new high ground, which is likely a bullish indicator. Assuming this area does not present resistance, the advance may well continue, possibly driven by some favorable earnings reports.
Meantime, investors received a few constructive economic reports today. Producer prices rose 0.4% in December, coming in largely as expected. Most of the increase came from higher energy prices, while, food prices actually dipped a bit. Meanwhile, the economy in the New York region was quite strong, as the Empire Manufacturing Survey for January rose sharply to 12.5, which was well ahead of expectations. This afternoon the Fed released its Beige Book report, but this business as usual issuance did little to move stocks, one way or the other. The markets may have gotten some help from the international arena this morning, too, as the World Bank raised its 2014 GDP forecast. This helped lift markets on the Continent, setting stage for a good performance here in the U.S.
In corporate news, investors are now receiving a steady helping of earnings reports. Today, we heard from Bank of America (BAC). Those shares were up, after the banking giant put out a good report. However, Fastenal (FAST) stock slipped a bit on a weak release. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:20 PM EST - The bulls are building off of yesterday’s stellar gains thus far today. As we reach the midday hour on the East Coast, the Dow Jones Industrial Average, the tech-heavy NASDAQ, the S&P 500 Index, and the small-cap Russell 2000 are all nicely higher. The Dow 30 is up the biggest on a percentage basis, but the buying has been rather encompassing, with both small- and large-cap stocks holding nice gains. Overall, advancing issues are leading decliners on both the New York Stock Exchange and the NASDAQ.
Giving equities a boost was a decent report on the economy prior to the commencement of trading on these shores and some encouraging earnings news, most notably from banking giant Bank of America (BAC). Shares of the former Dow-30 component are higher, as the bank reported that earnings jumped nearly five-fold in the latest quarter. Other big names that are up today include Advanced Micro Devices (AMD), Cisco Systems (CSCO - Free Cisco Stock Report), and Apple (AAPL). Investors reacted positively to news that Apple has a bigger-than-expected deal with China Mobile in place, with should help in penetrate the smartphone market in the world’s second-largest economy.
However, today’s buying has extended well beyond just the big name stocks. The large majority of the 10 major sectors are in the black as trading nears the second half of the session. Once again, the industrial stocks are showing some leadership. The basic materials group is also is exhibiting some strength. A decent report on the economy—the producer price index showed that inflation at the wholesale level remains tame, but rose enough to ease some concerns about the possibility of disinflation or even deflation—likely had a positive impact of some of the more economically sensitive groups. Energy issues, which have been notable laggards thus far in early 2014, started the session lower, but have worked their way back toward breakeven. The utilities issues, though, are still in the red.
Meantime, as noted above, the news from Corporate America is lending some support to equities. In addition to the good earnings report from Bank of America, investors cheered the Apple news and also bid up shares of Aeropostale (ARO) after reports surfaced that the teen apparel retailer may be looking to put itself on the auction block. The stocks of chipmakers Advanced Micro Devices and Intel (INTC - Free Intel Stock Report) are very active ahead of tomorrow afternoon’s earnings report from the latter company. The Dow-30 component also received a market performance upgrade from a brokerage house today that seems to be also helping lift the stock. Another big technology name that is building on yesterday’s price gain is Microsoft (MSFT - Free Microsoft Stock Report).
Looking ahead to the remainder of the trading day, the bulls are in position to make it consecutive big winning days. However, we recommend that investors keep a close eye on the latest Beige Book summation of economic conditions from the Federal Reserve. This report, which is due out at 2:00 P.M. (EDT), may give some more clues about what the central bank leaders will do at the next FOMC meeting later this month. Our sense is that the Beige Book findings will not have a major impact on trading today, as the current feeling on Wall Street is that tapering of the Fed’s highly accommodative bond –buying program will continue this month. With that sentiment already baked into the market, the Beige Book likely will not be a game changer and the bulls will probably remain in the driver’s seat this afternoon. - 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 – Bank of America (BAC), one of the nation’s largest financial institutions, is in the spotlight today after reporting better-than-expected fourth-quarter results, helped by a decline in loan-loss provisions. The stock is trading moderately higher ahead of the bell, as a result. On the other hand, December-period financials from retail building supply company Fastenal (FAST) did not impress investors, and the stock is down modestly in the premarket, in response.
In other news, automaker General Motors (GM) has updated its 2014 forecast and announced a plan to reinstate its quarterly cash dividend after an almost six-year hiatus. The first $0.30 payment will be made on March 28th. GM stock is down slightly in pre-market trading.
On the M&A front, Aeropostale (ARO) stock is indicating a notably higher opening, after news reports surfaced that the teen apparel retailer may be looking to put itself on the auction block. – 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 bulls, put on the defensive to start the new week, with an outsized 179-point plunge in the Dow Jones Industrial Average on Monday, regained their footing at the opening bell yesterday, as stocks mounted an early charge that didn't falter all day. In fact, the bulls had their way throughout the session, with the leading averages staying decidedly in the plus column all day, and with the tech-laden NASDAQ gaining even more than it had lost the previous session, and establishing a new all-time high in the process. It was the classic Monday-Tuesday reversal that we have written about so often in the past.
What apparently helped the bullish case was a better issuance on December retail sales than had been expected. Specifically, the Commerce Department reported at 8:30 AM (EST) yesterday that such spending had increased by 0.2% last month, which was slightly better than the forecast increase of 0.1%. However, if we back out the high-priced auto component from the aggregate mix, we find that the so-called core rate of retail spending had ticked up by a more formidable 0.7%. Such a firming helped to partly take away some of the sting from last Friday's dour report on non-farm payrolls.
The bulls, in fact, jumped on this key metric from the start, taking the Dow Jones Industrial Average up some 50 points at the start of the day. Then, that 30-stock blue chip composite held that gain through much of the morning before adding additional strength after lunch, finally pressing ahead by 116 points. The other averages, led by the NASDAQ did even better, with this latter composite gaining 70 points, or somewhat more than it had lost on Monday. The Dow, though, lagged the pace, with its gain being short of what it had lost to start the week.
This turnaround in the stock market came despite some talk by a pair of Federal Reserve Bank Presidents, namely Charles Plosser of Philadelphia and Dallas Fed President Richard Fisher, who intoned that they favored additional monetary tapering going forward, although Mr. Plosser also opined that he did not see a pickup in interest rates very soon. Such tapering talk, however, seconded the argument advanced on Monday by Atlanta Fed President Dennis Lockhart to the effect that he favored added tapering efforts going forward. Such musings are important at this time, as the FOMC will be meeting on January 28th and 29th, and possibly voting to continue its efforts to slow down the monetary accommodation.
In addition to the retail sales data and the Fed talk, the market also was influenced by the start of fourth-quarter earnings reporting season. That quarterly event will take center stage over the next few weeks, with just a passing step aside for the aforementioned FOMC get together at the end of the month. As to earnings, they are starting to trickle in and so far the few companies presenting their results are matching expectations. Of course, the next two weeks will tell us a lot more as much of Corporate America will show off its wares. In recent quarters, companies have, for the most part, exceeded lowered expectations; we would expect this to be the case as well for the recently concluded fourth quarter.
In other news, oil broke its latest losing streak yesterday, while gold resumed its downtrend, pulled down by lowered forecasts for the precious metal. The gold stocks, not surprisingly, sold off on the day, thereby continuing a descent, which had made them just about the worst market performers last year. Interest rates ticked up, however, in part we sense, on the taper talk and the slightly better retailing data.
Now, we look ahead to the rest of the week, a five-day stretch that later on today will see the Fed issue its Beige Book economic summation and toward the end of the week will see the issuance of key homebuilding metrics and industrial production figures. As to the markets, they were mostly stronger overnight in Asia and are heading nicely higher in Europe this morning, seemingly taking their lead from the healthy performance on our shores yesterday. As to our market, the early signs are again positive for the bulls, as the Standard and Poor's 500 Index is up three points about an hour ahead of the opening, while the NASDAQ is some 13 points better. Now, Corporate America will need to deliver. 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.