Wednesday, March 30, 2011

Market Commentary (After Market Close): Stocks Score More Gains

Renewed buying interest has the stock market on pace for its best first quarter performance since 1998.

Robust gains abroad provided a spark that helped stocks extend their prior session advance. No real reaction was made to the latest ADP Employment Change, which indicated that private payrolls increased by 201,000 in March. The consensus had called for an increase of 210,000.

Support continues to be broad based, but telecom has consistently been a top performer during the course of the past few sessions. In fact, the sector is up about 5% week to date. Integrated plays AT&T (T 30.71, +0.66) and Verizon (VZ 38.46, +0.17) have hit new 52-week highs in the process.

Strength in both shares of T and VZ helped the Dow climb to within about 20 points of the two-year high that it set little more than a month ago. Meanwhile, strength among small-cap stocks took the Russell 2000 to its highest level since 2008. The broad-based S&P 500 is back near its one-month high, which has it on pace for a quarterly gain of more than 5%. It encountered some resistance in the 1330 zone, though.

Energy stocks experienced some volatility with President Obama's outline of the U.S. energy policy. Energy stocks had been up about 1%, but gave up all of that gain in the minutes leading up to the speech. A lack of surprises enabled the sector to rebound to a 0.8% gain.

Tech stocks traded with relative weakness all session. Although the sector settled in positive territory, its 0.2% gain paled in comparison with what the broad market scored. Despite that, the tech-rich Nasdaq actually edged out its counterparts. Biotech play Cephalon (CEPH 75.44, +16.69) was a top performer after Valeant Pharma (VRX 50.08, +5.69) announced an all cash takeover offer of $73 per share for the company. Both stocks set 52-week highs.

Even though the end of the first quarter is close at hand, participation remains unimpressive in that share volume failed to break 1 billion on the NYSE again. Part of the reluctance among portfolio managers to rearrange their holdings is owed to caution ahead of the official nonfarm payrolls report, which is due this Friday.

Treasuries settled the day with solid gains. Their advance came in the face of a stronger stock market and lackluster results from an auction of 7-year Notes. The auction drew a bid-to-cover of 2.79, dollar demand of $80.9 billion, and an indirect bidder participation rate of 49.4%.

Advancing Sectors: Telecom (+1.4%), Materials (+1.2%), Consumer Discretionary (+1.1%), Materials (+1.0%), Energy (+0.8%), Financials (+0.7%), Health Care (+0.7%), Consumer Staples (+0.6%), Industrials (+0.4%), Tech (+0.2%) Declining Sectors: (None)

Thursday, March 24, 2011

Market Commentary (After Market Close): Appetite for Risk Spurs Stocks Higher

There wasn't really room for positive spin on today's headlines, but stocks still scored strong gains as market participants showed renewed interest in risk.

The tone of trade today was positive from the start. Participants initially took their cues from Europe's major bourses, which all advanced around 1% or more in the face of a decision by Moody's to downgrade about 30 banks in Spain, the likelihood for a bailout of Portugal following the failure of its Parliament to pass austerity measures, and a mixed batch of economic data.

There wasn't much to boast about at home either. Data featured a 0.9% drop in overall durable goods orders for February and a 0.6% fall in orders less less transportation. The consensus among economists polled by had called for increases of 1.1% and 1.8%, respectively.

The latest weekly initial jobless claims count came in at 382,000, which is on par with the 384,000 initial claims that had been broadly expected.

Consumer electronics and home office supplies retailer Best Buy (BBY 30.13, -1.72) issued cautious commentary during its quarterly conference call that overshadowed the company's upside earnings surprise. The stock dropped to a two-year low after it had opened in positive territory.

Even amid lackluster headlines stocks still attracted strong buying interest. The effort even took the S&P 500 past the 1300 zone through secondary resistance above that point to a 10-day high.

Tech stocks, which collectively represent the largest sector by market weight, were a primary source of leadership. The sector climbed 1.6%. Large-cap tech issues like Research In Motion (RIMM 64.09, +1.97), which spiked above its 50-day simple moving average ahead of its earnings report, helped the Nasdaq Composite outperform its counterparts.

Financials lagged for the second straight session. Bank of America (BAC 13.48, -0.17) deepened its one-month low in the wake of yesterday's news that the Fed refused the bank's proposal to distribute capital to shareholders in the second half of 2011. Capital One Financial (COF 51.86, +0.45) was dealt the same decision, but its shares actually staged an impressive rebound. As a group, financials advanced just 0.5%.

Energy stocks were today's weakest performers. They gained just 0.3% after oil prices failed to sustain a move above $106 per barrel to settle essentially unchanged at $105.60 per barrel.

Precious metals came under pressure after pushing higher. Gold prices closed with a 3.1% loss at $1434.90 per ounce after the continuous gold contract traded to a new all-time high at $1448.60 per ounce. May silver ended settled with a 0.6% gain at $37.37 per ounce after it hit $38.18 per ounce, which is its highest level in more than 30 years.

For the third straight session share volume was unimpressive. That should pick up in coming sessions as money managers reposition their portfolios for quarter's end.

Advancing Sectors: Tech (+1.6%), Consumer Discretionary (+1.5%), Health Care (+1.2%), Industrials (+1.0%), Telecom (+0.9%), Consumer Staples (+0.8%), Finance (+0.5%), Materials (+0.4%), Utilities (+0.4%), Energy (+0.3%) Declining Sectors: (None)

Wednesday, March 23, 2011

Market Commentary (After Market Close): Market Musters Modest Gain

Stocks slipped to modest losses in the early going, but the gradual accumulation of buying interest helped stocks work their way to strong gains. Although the S&P 500 still couldn't push past the 1300 line, the advance offset losses dealt during the prior session.

Morning participants opted to put pressure on stocks. Early efforts were generally broad based, but financials were hit the hardest after the Fed refused a proposal by Bank of America (BAC 13.65, -0.23) to distribute capital to shareholders in the second half of 2011. That headline completely overshadowed an upside earnings surprise and dividend hike from Discover Financial (DFS 23.44, +1.19).

Financials were down more than 1% at their morning low, but slashed that in afternoon trade. The sector settled with a relatively tame loss of 0.3% as materials stocks helped lead buyers back into the market.

Materials stocks were only down slightly in early trade, but swung to a 1.4% gain with help from metals and mining issues, namely Freeport McMoRan (FCX 54.94, +2.66) and Newmont Mining (NEM 54.83, +1.66). DuPont (DD 53.46, -0.21) was one of the few materials sector members that failed to move higher.

Despite the sector's overall strength, it lacks the weight necessary to take the S&P 500 above the 1300 line, which has represented a formidable point of resistance for the past couple of sessions. The S&P 500 had hugged the 1300 line during the last hour of trade, but pulled back a couple of points in the final few minutes. The late slip coincided with headlines that indicated Portugal's Parliament rejected government austerity measures.

In terms of individual performances, Jabil Circuit (JBL 20.99, +2.06) was one of today's top performers. The stock posted its strongest percentage gain in months on high share volume following an upside earnings surprise and upside guidance.

Cree (CREE 42.90, -6.10) was pummeled after the company cut its forecast. A disappointing outlook from Adobe Systems (ADBE 31.68, -1.20) brought about a strong push against its shares.

Economic data was limited to new home sales figures for February. They fell 17% month-over-month to an annualized rate of 250,000, which is a record low and considerably less than consensus for 288,000. The SPDR S&P Homebuilders ETF (XHB 18.01, +0.12) managed to shake off the news and stage a strong gain.

Tomorrow's economic calendar features weekly jobless claims and the latest durable goods orders data. Tomorrow also brings the latest weekly natural gas inventory report and results from an auction of 10-year TIPS. Advancing Sectors: Materials (+1.4%), Consumer Discretionary (+0.8%), Tech (+0.6%), Industrials (+0.4%), Consumer Staples (+0.3%), Telecom (+0.2%), Energy (+0.2%) Unchanged: Utilities Declining Sectors: Health Care (-0.1%), Financials (-0.3%)

Tuesday, March 22, 2011

Market Commentary (After Market Close): Lackluster Action Leads to Narrow Loss

The S&P 500 faltered in the face of resistance near the 1300 zone during the early going. That left it to muddle along with a modest loss for the rest of the session as buyers sat on their gains from the prior session.

Although there is still headline risk related to the military action in Libya and the status of damaged nuclear facilities in Japan, the lack of deterioration of relative conditions in those countries has made them less threatening, for the time being, to market participants. That theme helped the major equity averages advance more than 1% yesterday. However, there wasn't any follow through this morning. The lack of early buying interest left stocks to slip into the red, which is where they spent the rest of the session.

Overall selling pressure was rather mild today. Declining share volume outpaced advancing volume by just 3-to-2 -- total share volume on the NYSE barely broke 800 million.

Corporate headlines drove action in a few individual names, but did little for the overall market. Walgreen (WAG 39.21, -2.76) slumped to one of its worst single-session losses in about nine months following in-line earnings results. Meanwhile, Express (EXPR 18.42, +1.02) hit a one-month high following news of its upside earnings surprise. Bristol Myers Squibb (BMY 26.29, +0.29) initially bounced to a one-month high in response to news that one of its drugs met a primary endpoint in a Phase III study, but the stock gradually gave back a chunk of its gain.

Renewed pressure against the greenback dropped the Dollar Index to a new 52-week intraday low, but the buck battled back for a flat finish.

No economic data of consequence was out today. Tomorrow brings the latest monthly new home sales figures, though. Also on tomorrow's agenda are weekly crude oil inventories and a speech from Fed Chairman Bernanke.

Monday, March 21, 2011

Market Commentary (After Market Close): Stocks Put on Strong Performance

A strong favor for stocks today sent the major equity averages up to impressive gains. The advance has culminated in the Dow's best three-session performance since September.

Although an escalation of military engagement in Libya sent oil prices up more than 1% to close pit trade above $102 per barrel, news that Japan has made progress in its efforts to restore damaged nuclear facilities helped quell concerns about a potential meltdown. That helped both foreign markets and U.S. equity averages add to the gains that they staged late last week.

Despite the broad market's recent momentum, the S&P 500 struggled to extend its climb above the 1300 line. Meanwhile, the Dow worked its way to a new weekly high. That feat is owed to three straight advances, which have collectively made for a gain of more than 3%.

Dow component Caterpillar (CAT 107.59, +2.53) was a leader among blue chips as its shares set a record high, but AT&T (T 28.26, +0.32) led morning headlines with news that it will acquire T-Mobile from Deutsche Telekom in a $39 billion deal. The news won shares of T an upgrade from analysts at Citigroup. Shares of Sprint (S 4.37, -0.68) were shunned in response to the news.

The latest quarterly report from Tiffany & Co. (TIF 60.22, +2.93) made the stock a top performer. The company's news release featured an upside earnings surprise and upside guidance, which included consideration for the possibility of softer demand from Japan in the wake of the devastating earthquakes that stuck more than a week ago.

Supply and shipment concerns related to the wreckage in Japan had exacerbated recent weakness in semiconductor stocks during recent weeks, but the group rallied this session. Specifically, the 1.9% scored by the Philadelphia Semiconductor Index was its strongest single-session move in two weeks. Semiconductor stocks and large-cap tech helped lead the Nasdaq Composite this session.

News that Citigroup (C 4.44, -0.06) shares will undergo a reverse 10-for-1 stock split overshadowed the company's intention to reinstate its $0.01 quarterly dividend. Disappointment over the reverse split put pressure on the stock. That left shares of C to lag for the entire session, along with many other financials. The Financial Select SPDR ETF (XLF 16.34, +0.07) settled only modestly higher.

Favor for risk led to renewed selling against the greenback. In turn, the Dollar Index dropped to its lowest level since late 2009.

Treasuries were also clipped. They weren't helped by news that the Treasury will add to supply as it begins to wind down its $142 billion Mortgage-Backed Securities Portfolio this month.

The only item on the economic calendar was February existing home sales figures, which reflected annualized sales of 4.88 million. The consensus among economists polled by had been pegged at an annualized rate of 5.05 million.
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