After The Close - Stocks continued their winning ways today on earnings and economic news that was good enough, plus a spark from a pickup in merger and acquisition activity. At the close, although off their best levels of the session, the Dow Jones was up 65 points, the NASDAQ had gained 40 points, and the S&P 500 was almost eight points to the good. Market breadth confirmed the advance, with the number of advancing stocks easily outpacing decliners on the Big Board.
This morning’s economic data were moderately upbeat, with the number of existing homes sold in March falling less than expected. There have been concerns that rising home prices and higher mortgage rates are putting a damper on the recovery in the housing market. But those worries have been discounted by the reasoning that poor weather of late has accounted for some of the downtick in sales. How well the real estate market performs in the spring buying season is likely to be the telling factor. Meantime, we’ll get data on March new-home sales tomorrow. A slight rise is expected.
Consumers aren’t getting any relief at the pump, either, with gasoline prices rising seasonally, and a replay of Cold War tensions with Russia over Ukraine lifting quotations for oil in recent weeks. Crude oil did fall more than $2 a barrel today, though, on some profit-taking. That dip kept the energy sector from fully participating in today’s rally.
But it was the bulls who ruled the roost today. Among the Dow-30 stocks, shares of Home Depot (HD - Free Home Depot Stock Report) led the way after a brokerage house upgrade. In the tech space, Netflix (NFLX) stock did very well after reporting favorable earnings and word that the online entertainment company would be raising prices for its services. Wall Street tends to like shares of companies that exhibit pricing power.
Among the stock market’s ten sectors, healthcare was the big winner, fueled by a flurry of deal making. Stocks benefiting from that trend included Novartis (NVS), GlaxoSmithKline (GSK), Valeant Pharmaceuticals (VRX), and Allergan (AGN). Once corporate transactions in a particular sector are announced, the feeling is that there may be more to come as companies make moves to keep up with the competition.
Tomorrow brings another heavy dose of earnings from Corporate America, which so far has held its own this reporting season. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:30 PM EDT - The U.S. stock market is advancing strongly today, as traders look to extend recent gains. Notably, the S&P 500 Index has closed higher for five consecutive sessions, as the bulls reassert control over the market. At just past noon in New York, the Dow Jones Industrial Average is up 102 points; the broader S&P 500 Index is ahead 11 points; and the NASDAQ is adding on 45 points. Market breadth shows broadbased buying of equities, as gaining stocks are outnumbering decliners by more than two to one on the NYSE. Leadership can be found across most market sectors, which is encouraging. There is particular strength in the healthcare group, helped by some merger-related news in that area. The consumer cyclical names are also making strides. Meanwhile, the utilities, which have been strong performers lately, are lagging a bit.
Technically, the market has recovered considerable ground over the past week, or so. The S&P 500 Index is now back at the 1,880 level, and about 1% from high ground. Renewed strength on the NASDAQ is also likely a good indication, as this technology-heavy composite had been badly battered in recent weeks. It remains to be seen if stocks can move higher from here, without encountering resistance.
Traders received somewhat mixed economic news this morning. The FHFA Housing Price Index rose 0.6% for February, which was a slight improvement over January’s reading. However, existing home sales came in at 4.59 million units, annualized, for the month of March, which was just short of the prior month’s reading, but a bit above expectations. Tomorrow, we will get a look at new home sales for March, and that may shed further light on the nation’s housing situation.
Meanwhile, the first-quarter earnings season continues. Shares of Netflix (NFLX) are trading higher today, after that company issued a healthy report. Travelers (TRV) shares are up slightly, as the insurance giant put out a decent report and announced a dividend increase. Elsewhere, shares of Allergan (AGN) and Valeant (VRX) are both up on news of a possible merger. - 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 – The earnings floodgates are now wide open, with a slew of quarterly reports out from high profile companies. The biggest winners, at least at this early hour, appear to be shares of online video entertainment services provider Netflix (NFLX) and motorcycle maker Harley-Davidson (HOG), both of which are trading notably higher ahead of the bell. Shares of insurer Travelers (TRV – Free Travelers Stock Report), cable company Comcast (CMCSA), aerospace and defense company Lockheed Martin (LMT), integrated steel producer AK Steel (AKS), diversified manufacturer United Technologies (UTX – Free United Technologies Stock Report), and restaurant operator McDonald’s (MCD – Free McDonald’s Stock Report) are all indicating higher openings on earnings news, as well. Conversely, investors took issue with quarterly reports and/or updated outlooks from semiconductor company Rambus (RMBS), office equipment manufacturers Lexmark (LXK) and Xerox (XRX), and apparel and accessories retailer bebe stores (BEBE). Those stocks are moving lower in the premarket, with BEBE and RMBS showing considerable weakness.
There is also a lot going on in the pharmaceuticals space, as drugmaker Valeant (VRX) has teamed up with activist investor William Ackman in an attempt to acquire industry peer Allergan (AGN). The pair has offered to buy the Botox maker for $48.30 in cash and 0.83 of a Valeant share for each AGN share. Consequently, AGN stock is soaring ahead of the bell, with VRX showing a strong upward bias, as well. Elsewhere, Novartis (NVS) has agreed to sell its animal health business to Eli Lilly (LLY) for $5.4 billion and purchase GlaxoSmithKline’s (GSK) oncology products unit for $14.5 billion. GlaxoSmithKline will also be acquiring most of Novartis’ vaccine business. All three stocks are up in premarket trading, 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 - Investors returned to the trading arena yesterday, following a three-day holiday weekend, and did so somewhat hesitantly, but on a modestly positive note, overall.
To wit, after opening the latest session higher, then giving back some ground after an hour or so, the bulls regrouped, and although they never took the reins aggressively, as they had done last week, they still pointed the way higher. At the peak of the session, the Dow Jones Industrial Average was ahead by over 50 points; the Standard and Poor's 500 Index was in the black by seven points; and the tech-laden NASDAQ was better by just over 25 points. By the close, the averages were at or very near to their respective highs for the day, helped by some last-minute buying.
In all, the Dow added 41 points; the S&P 500 gained seven points; the NASDAQ climbed 26 points; and the small-cap Russell 2000 closed in the plus column by three points. It was a solid win for the bulls, just not the eye-catching gains seen a week ago. It seems as though the market wants to rest on its laurels. In any event, fears of a correction, which had been notable on the NASDAQ and the Russell, have all but disappeared, for now. In the main, the recent rally has been underpinned by heretofore oversold conditions and selectively better economic metrics.
Meanwhile, the better feelings on Wall Street yesterday were reflective of some additional economic improvement, in the form of a nice gain in the index of leading indicators. We also enjoyed a succession of better-than-expected earnings reports. On the whole, earnings season, which is in high gear, has been a mixed affair. On point, it has been better than feared, but not nearly as good as results in some recent quarters. Among the few profit highlights yesterday, we saw oilfield services giant Halliburton (HAL) report results that topped consensus expectations, while a similar showing was made by household products behemoth Kimberly-Clark (KMB). The jump in the leading indicators for both February and March could well signal that business activity will strengthen as the spring gives way to summer.
As to individual sectors, we did see some slippage in both the basic materials issues and the precious metals stocks, with the steels, in particular weak early in the day, though they did manage to pare their modest deficits late in the session. As to the precious metals stocks, they received a boost early in the day after speculation surfaced over the weekend that Canada's giant miner Barrick Gold (ABX) was again interested in acquiring U.S. competitor Newmont Mining (NEM). We note that such speculation is not new, and while the shares of the former backtracked on such speculation, Newmont stock rose nicely. Meanwhile, there seems little at this point to hang one's hat on regarding such preliminary merger rumors. Also, perhaps influencing the gold issues, is the fact that the price of the precious metal continues to slide, with the latest quotations now well under $1,300 an ounce.
So, here we are. The market has started the new week where it left the old one off, albeit on a much less exciting note. Meantime, earnings season is now dominating the market scene. And that should again be the case today as a number of rather high-profile companies are set to report their quarterly results. Also on the docket will be the report, issued some 30 minutes into the trading day, of existing home sales for March. A small gain is the forecast. That metric, which will be provided by the National Association of Realtors, will be followed tomorrow morning by a report from the U.S. Department of Commerce on new home sales. Here, a flat result is the general expectation. Data on refinancing activity are also expected tomorrow. And here, an increase is the consensus forecast, as housing seeks to regain some of the momentum lost late last year (as borrowing costs rose) and over the long and arduous winter, which only recently passed.
As to the day ahead, we are now seeing some tepid movement in our equity futures, with the S&P 500 Index futures off a bit more than a point, while the NASDAQ futures, buoyed by a sharp pre-market gain in the shares of Netflix (NFLX), are now up slightly. All in all, it should be a ho-hum opening, as the bulls strive to prevent a Monday-Tuesday reversal, of which we have spoken rather often. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.