4:20 pm : Stocks rallied Wednesday as renewed optimism on the earnings front, especially from some notable tech names, sparked a wave of buying interest that closed all three major averages sharply higher. The Dow finished in record territory, the S&P 500 hit a fresh six-year high and the Nasdaq closed up 1.4%, extending its year-to-date leading advance to more than 2%.
With nothing of note on the economic calendar, earnings were again at the forefront of investors' minds Wednesday. More notable than the majority of the reports either meeting or exceeding Wall Street expectations, though, was a batch of upbeat guidance that suggested growth prospects might not be that bad after all.
Bargain hunters hungry for even the slightest bit of clarity to suggest recent market weakness may be overdone came primarily from Technology, which is also where the cloud of uncertainty has been most prevalent. As evidenced by the Nasdaq outpacing its blue-chip counterparts to the upside, Yahoo! (YHOO 28.94 +1.98) and Sun Microsystems (SUNW 6.15 +0.49) were among the biggest standouts from a news standpoint. Even though neither is the tech bellwether they used to be, both companies followed up better than expected earnings reports with some additional upbeat developments.
Yahoo closed up 7.3% as investors applauded news that an earlier than anticipated roll-out of its Panama ad search technology implies growth acceleration beginning in Q2. Sun soared nearly 9% after announcing a $700 mln private placement transaction with KKR Private Equity Investors. Other tech stocks topping estimates and lending some reassurance about a sector plagued of late by a slew of reports taht failed to impress investors were Corning (GLW 20.92 +2.08), Citrix Systems (CTXS 31.66 +1.79) and Seagate Technology (STX 28.32 +2.14).
Advanced Micro Devices (AMD 16.01 -1.50), which missed expectations and issued a Q1 sales warning, was really the sector's only sore spot since 15 out of 18 components in the PHLX Semiconductor Sector Index still finished higher.
Of the other nine sectors trading higher, Telecom actually turned in the day's best performance (+2.8%). AT&T (T 36.87 +1.51) surging 4.3% to a five-year high after its Cingular Wireless unit posted sharply higher profits, and ahead of its own report tomorrow morning, was the biggest reason behind the sector's outperformance. It is worth noting that AT&T also accounts for roughly 7% of the weighting in Tech.
Financials was another influential sector. Brokerage stocks got a boost following reports that rivals Goldman Sachs (GS 220.10 +7.46) and Morgan Stanley (MS 84.65 +2.03) may collaborate on a potentially $15-20 bln private-equity deal.
Health Care also provided some notable leadership to the upside, getting some help as Dow component Pfizer (PFE 26.80 +0.43) recouped much of yesterday's downgrade-induced 2.3% decline. The sector got an additional boost after AmerisourceBergen (ABC 52.01 +3.94) topped forecasts and raised FY07 guidance, which plays into our Overweight rating on Health Care. BTK 0.8% DJ30 +87.97 DJTA -0.1% DJUA 0.8% DOT +2.0% NASDAQ +34.87 NQ100 +1.7% R2K +1.1% SOX +1.3% SP400 +1.0% SP500 +12.14 XOI +0.5% NASDAQ Dec/Adv/Vol 994/2044/2.15 bln NYSE Dec/Adv/Vol 1019/2271/1.52 bln
3:30 pm : Sellers remain absent going into close as investors continue to embrace some much-needed clarity on the earnings front, especially for tech stocks. In fact, the renewed confidence in techs' growth prospects is especially apparent in a handful of stocks reporting after the close. eBay (EBAY 29.90 +1.28), a suggested holding in the Briefing.com Active Portfolio, is up 4.5% ahead of its seasonally strongest quarterly report. Other notable gainers also scheduled to release earnings tonight include LSI Logic (LSI 10.52 +0.53), Novellus Systems (NVLS 30.65 +0.60), Qualcomm (QCOM 38.75 +0.62), and Symantec (SYMC 17.58 +0.17) which are up 5.3%, 2.0%, 1.6% and 1.0%, respectively. DJ30 +75.43 NASDAQ +33.03 SP500 +10.61 NASDAQ Dec/Adv/Vol 1015/2000/1.83 bln NYSE Dec/Adv/Vol 1012/2233/1.23 bln
10:30 am : More of the same for stocks as buying remains widespread across most areas. Of the two sectors succumbing to selling pressure, Energy is turning in the worst performance (-0.6%). That's not all that surprising since it was up an impressive 2.5% yesterday as oil prices soared nearly 5% to close above $55/bbl. The commodity is currently down 0.7% at $54.60/bbl as traders aren't willing to take any bets ahead of today's weekly inventories report, which will be out momentarily.
Notwithstanding oil's decline, transportation stocks are trading lower, which is contributing to the Industrials sector's underperformance this morning. The weakness in transports is due in large part to a Q4 shortfall from Norfolk Southern Corp (NSC 50.74 -2.99), which has sparked some consolidation in Railroads. The latter ranked among yesterday's best performers (+3.7%) but is among today's biggest laggards (-1.8%).DJ30 +17.79 NASDAQ +14.38 SP500 +3.03 NASDAQ Dec/Adv/Vol 1128/1580/456 mln NYSE Dec/Adv/Vol 1206/1678/256 mln
10:00 am : The indices are holding onto most of their early gains as eight out of 10 sectors remain positive. Technology (+1.0%) is providing the bulk of early upside influence, as a slew of positive developments (e.g. YHOO, SUNW, GLW, and STX) help investors look past Advanced Micro Devices' (AMD 16.24 -1.27) Q4 shortfall and significant sales warning for Q1. The stock is down 7.3% but is so far not having much of an impact on other chip makers since it's the only component (out of 18) in the PHLX Semiconductor Sector Index trading lower. The Telecom sector, though, is turning in today's best performance (+1.9%). It is getting a huge lift from Dow component AT&T (T 35.97 +0.61) after its Cingular Wireless unit posted record results. DJ30 +26.35 NASDAQ +13.02 SOX +0.7% SP500 +3.07 NASDAQ Dec/Adv/Vol 862/1624/192 mln NYSE Dec/Adv/Vol 1088/1374/80 mln
09:40 am : As expected, stocks open higher as optimistic comments from some notable tech names lends some credence to the belief that the recent sell-off in Technology may be overextended. As evidenced by the Nasdaq's early outperformance, Yahoo! (YHOO 28.70 +1.74) and Sun Microsystems (SUNW 6.14 +0.48) are among this morning's biggest winners after following up better than expected earnings reports with additional upbeat news. Yahoo is up 6.5% as investors applaud news that its Panama ad search technology will be rolled out earlier than anticipated. Sun is soaring 8.5% following reports that KKR Private Equity Investors has invested $700 mln in the company. DJ30 +26.36 NASDAQ +15.20 SP500 +3.06 NASDAQ Vol 110 mln NYSE Vol 56 mln
09:15 am : S&P futures vs fair value: +3.2. Nasdaq futures vs fair value: +11.5.
09:00 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +11.5. Futures indications are still holding their own near morning highs, setting the stage for the cash market to open on an upbeat note. Aside from a decent batch of earnings news, a nearly 1.0% decline in oil is also contributing to the positive disposition. Crude for March delivery soared 4.7% yesterday, its biggest one-day increase since September 2005, but is consolidating some of that gain ahead of today's weekly inventories report at 10:30 ET. As a reminder, Energy's leadership (+2.4%) in sympathy with the oil rally was a big reason behind Tuesday's modest recovery effort in the wake of Monday's sell-off.
08:30 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +9.8. Still shaping up to be a solid start for stocks as futures trade continues to trade well above fair value. With nothing of note on the economic calendar, the absence of any potentially troubling data is placing even more of an emphasis this morning on what looks to be a decent overall earnings season. Dow component McDonald's (MCD) has been the latest to report results, posting record numbers for 2006 and matching analyst estimates that were upwardly revised one week ago today.
08:00 am : S&P futures vs fair value: +2.7. Nasdaq futures vs fair value: +9.2. Positive bias persists in pre-market trading as the majority of earnings reports continue to meet or exceed Wall Street expectations, especially in the beaten-down Tech sector. Among the big tech names topping forecasts and alleviating growth concerns are Yahoo! (YHOO), which will also roll out Panama earlier than expected, and Sun Microsystems (SUNW), which is getting an extra lift from a large private-equity investment. Seagate Technology (STX) issuing some upbeat Q2 guidance and Corning (GLW) swinging to a profit in Q4 are also easing some of the uncertainty that has led to a tech sell-off that many may now feel was overextended.
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