4:20 pm : Despite some headwinds right out of the gate, it didn't take long for yesterday's momentum to resurface and silence the naysayers still making bets that the market remains overbought. As a result, sellers' attempts to fight the tape again came up short. The Dow posted its 21st advance in 24 tries and the S&P 500 came within a point of hitting the psychologically important 1,500 mark, a level not seen since 2000.
For the 17th time this year the Dow closed in record territory. However, for the first time in weeks, the blue-chip index's gains weren't the direct result of solid earnings reports from some of its components but rather anticipation of an earnings surprise from General Motors (GM 32.49 +1.19) tomorrow morning. The latter paced the way among the 28 Dow stocks posting gains and was just one of many components that helped Consumer Discretionary (+0.9%) provide some notable leadership to the upside.
Some more deal-making news provided additional sector support and contributed to today's decidedly bullish market breadth. The Dolan family confirming it will acquire 100% of the public interest in Cablevision Systems (CVC 35.80 +3.13) for $36.26 per share (or $10.5 bln) in cash earmarked Broadcasting & Cable TV (+1.3%) as a bright spot for buyers.
Movies & Entertainment (+1.1%) was also in focus amid speculation News Corp's (NWS 23.40 +0.41) unsolicited bid Tuesday for Dow Jones (DJ 56.32 +0.12) may start a bidding war. NWS, a suggested holding in the Briefing.com Active Portfolio, recouped nearly half of yesterday's 4.2% sell-off. Restaurants got a boost after Yum! Brands (YUM 66.80 +3.68) beat analysts' expectations and raised its 2007 earnings outlook.
Aside from M&A news and better than expected earnings reports across a wide array of industry groups, investors also rallied around some encouraging economic data. Albeit not typically a market mover, March Factory Orders rising a stronger than expected 3.1% (consensus 2.1%), the biggest gain in a year, gave an added boost to stocks and lifted the industrial-heavy Dow even further into unchartered territory.
Even though the surprisingly strong rise was due to a modest upward revision to last week's durable goods new orders component, and the one month increase does not necessarily mean that manufacturing is back on track, a market concerned about the pace of economic growth and looking for something other than earnings to support market gains embraced the data.
Technology was another influential leader to the upside. Cisco Systems (CSCO 27.67 0.81) surging 3.0% after Goldman Sachs urged investors to buy the stock ahead of its Q3 earnings report next Tuesday was the biggest source of sector support. Financials was also in focus after Dow component American Express (AXP 62.67 +1.35) climbed noticeably after competitor MasterCard (MA 126.15 +11.30) posted a blowout quarter.
With prices at the pump up 11% over the past month and expected to hit all-time highs by the end of the month, according to AAA, another pullback in crude futures helped ease worries about inadequate supplies with less than a month until the official start to the summer driving season.
More noteworthy was the fact that the Energy sector did not sacrifice much in the way of leadership in the face of another oil downturn.
Oil & Gas Drillers (+1.2%) were among the day's best performers after Transocean (RIG 89.15 +2.88), a suggested holding in the Briefing.com Active Portfolio, handily topped Wall Street forecasts last night after Q1 profits more than doubled. Refiners were another bright spot as shares of Sunoco (SUN 77.21 +1.45) ran up ahead of its report tonight with investors reflecting on the 30% jump in earnings from rival Valero Energy (VLO 72.94 +1.79) last Thursday. DJ30 +75.74 DJTA +1.0% NASDAQ +26.31 NQ100 +0.9% R2K +1.5% SOX +0.9% SP400 +1.1% SP500 +9.62 XOI +1.1% NASDAQ Dec/Adv/Vol 949/2132/2.11 bln NYSE Dec/Adv/Vol 842/2447/1.58 bln
3:30 pm : After getting to within one point of the psychologically significant 1,500 level on the S&P 500 just over an hour ago, a sense of nervousness has set in and given sellers a chance to lock in some of today's surprise performance.
Even as stock prices continue to run ahead of fundamentals as they relate to the earnings picture, it is worth noting that the S&P 500 is trading at only 15.7 times 2007 earnings versus a much loftier forward multiple of 26 when it closed at an all-time high of 1527.40 on March 24, 2000. The index at current levels is roughly 2% away from revisiting record levels. DJ30 +78.50 NASDAQ +24.69 SP500 +9.38 NASDAQ Dec/Adv/Vol 933/2125/1.69 bln NYSE Dec/Adv/Vol 779/2511/1.29 bln
3:00 pm : The indices are off their recent highs but are still posting sharp gains across the board. Of the 10 S&P 500 sectors trading higher, four of them -- Materials, Telecom, Consumer Discretionary, and Industrials -- are still up at least 1.0%.
With regard to the Dow, it is off 23 points below its intraday high but is well on pace to post its 17th record close this year and 21st gain in 24 days. For the first time in several days, though, the blue-chip index is not getting a boost from earnings results out of any of its 30 components but rather from competitors providing further confirmation that recent gains appear justifiable. DJ30 +97.25 NASDAQ +29.27 SP500 +11.39 NASDAQ Dec/Adv/Vol 882/2169/1.56 bln NYSE Dec/Adv/Vol 731/2522/1.18 bln
2:30 pm : Buying remains the name of the game as investors on the wrong side of the market's virtually unabated run-up since bottoming in mid March continue to cash in their chips. Exacerbating the market's recent upturn have been the S&P 500 and Nasdaq's ability to finally break through key resistance levels of 1498 and 2562, respectively.
About the only thing not stacked in the bulls favor is the lack of volume to lend even more conviction behind today's rally. The NYSE has finally seen 1.0 bln shares exchange hands. DJ30 +117.91 NASDAQ +31.16 SP500 +12.69 NASDAQ Dec/Adv/Vol 865/2158/1.42 bln NYSE Dec/Adv/Vol 759/2476/1.08 bln
2:00 pm : The bulls remain in complete control of the action as sellers remain few and far between. Of the 28 Dow components now trading higher, Verizon Communications (VZ 39.74 +1.23) leads the charge, surging 3.2% to a new 52-week high after rival Sprint Nextel (S 20.61 +0.60) saying their subscriber base shrunk for the third straight quarter lent further validation to Verizon's recent market share gains.
General Motors (GM 32.16 +0.86) is turning in the next best performance, climbing 2.8% as its Daewoo division posting a strong 31% rise in April sales gives shareholders hope that GM's earnings report tomorrow morning will check in better than expected. American Express (AXP 62.50 +1.18) is also up noticeably after competitor Mastercard (MA 126.52 +11.67) posted a blowout quarter.DJ30 +106.72 NASDAQ +29.88 SP500 +11.60 NASDAQ Dec/Adv/Vol 844/2155/1.29 bln NYSE Dec/Adv/Vol 722/2495/998 mln
1:30 pm : A renewed wave of buying interest within the last 30 minutes now has every index trading at fresh session highs. The Nasdaq paces the way among the majors, posting a 1.1% advance, while 26 of 30 Dow components lift the price-weighted index even further into record territory. The S&P 500 is posting a similar 0.8% advance, as all 10 sectors remain positive, and is now within two points of 1,500.
Faring even better, though, are the S&P 400 MidCap Index and Russell 2000 small-cap index. They are up 1.2% and 1.6%, respectively, as today's rising tide is lifting virtually every boat. DJ30 +98.92 NASDAQ +27.18 SP500 +11.42 NASDAQ Dec/Adv/Vol 853/2121/1.19 bln NYSE Dec/Adv/Vol 737/2466/918 mln
1:00 pm : Not much has changed since the last update as the bulk of industry leadership remains positive. Among the few areas failing to partake in today's broad-base rally, Health Care Technology (-3.7%) is turning in the worst performance following analyst downgrades on IMS Health (RX 30.55 -1.16).
IT Consulting Services (-3.6%) ranks second after Cognizant Technology Solutions (CTSH 84.75 -3.72) saying more subdued headcount growth overshadowed a 61% jump in Q1 profits. The handful of other areas losing ground are posting declines of less than 1.0%. DJ30 +83.38 NASDAQ +24.39 SP500 +10.30 NASDAQ Dec/Adv/Vol 880/2063/1.09 bln NYSE Dec/Adv/Vol 769/2415/836 mln
12:30 pm : Stocks kick off the afternoon session retracing their morning highs. The Industrials sector is now up 1.0% on the day as construction & farming stocks like Deere (DE 112.81 +4.11) continue to rally in sympathy with rival Agco Corp. (AG 43.13 +1.34) after it posted a blowout earnings report and raised its full-year outlook.
As evidenced by the Nasdaq now posting an intraday gain of 1.0%, Technology (+0.7%) is another sector providing influential leadership. Cisco Systems (CSCO 27.63 +0.77), which is surging 2.9% after Goldman Sachs urged investors to buy the stock ahead of its Q3 earnings report next Tuesday after the bell, is giving the sector its biggest boost. DJ30 +86.16 NASDAQ +26.08 SP500 +10.81 NASDAQ Dec/Adv/Vol 874/2051/969 mln NYSE Dec/Adv/Vol 762/2408/746 mln
12:00 pm : The major averages are holding on to the bulk of their gains midday as the bulls, armed with more upbeat earnings news, surprisingly strong orders data, falling oil prices, and more deal making, sideline market bears trying to rally early on around unreliable jobs data.
Before the bell, the monthly ADP employment report showed that an estimated 64,000 new private jobs, or roughly 90,000 nonfarm jobs, were created in April. The report, albeit lacking credibility with only one year of forecasting under its belt, suggested a slight softening in the tight labor market. Economists expect Friday's more closely-watched and well-established April nonfarm payrolls figure to check in around 100,000.
Be that as it may, better than expected earnings reports across a wide array of industry groups, from Time Warner (TWX 21.18 +0.59) and Transocean (RIG 88.40 +2.13) to MetLife (MET 66.89 +1.03) and Yum! Brands (YUM 68.17 +5.05), are providing a floor of buying support. The Dow is at record levels and the S&P 500 is less than five points away from hitting the psychologically important 1,500 mark. It hasn't closed above that level since 2000.
Some more M&A activity is also contributing to today's bullish disposition. The Dolan family confirmed it will acquire 100% of the public interest in Cablevision Systems (CVC 35.42 +2.75) for $36.26 per share (or $10.5 bln) in cash, representing a roughly 20% premium to its previous offer. Speculation that News Corp's (NWS 23.46 +0.47) unsolicited bid yesterday for Dow Jones (DJ 56.38 +0.18) may start a bidding war has helped NWS, a suggested holding in the Briefing.com Active Portfolio, recoup nearly half of yesterday's 4.2% sell-off.
Aside from the aforementioned components giving a boost to Consumer Discretionary (+1.3%), which is pacing the way among all 10 sectors trading higher, the Industrials sector (+1.9%) is also providing some notable leadership after March Factory Orders checked in with the biggest gain (3.1%) in a year due to an upward revision to last week's durable goods new orders.
Transportation stocks are another source of sector support, benefiting in part from a 1.7% decline in oil prices. Crude for June delivery is trading at $63.30/bbl after a report showing that refiners boosted output last week eased concerns about inadequate gasoline supplies heading into summer driving season. DJ30 +72.22 DJTA +1.2% NASDAQ +22.38 SP500 +9.41 XOI +0.6% NASDAQ Dec/Adv/Vol 882/2018/856 mln NYSE Dec/Adv/Vol 732/2398/650 mln
11:30 am : The indices are off their recent highs but market internals continue to show that sellers believing stocks are overbought and expecting worst-case scenarios are still running for cover. As reflected in the A/D line, advancers on the NYSE hold a more than 3-to-1 edge over decliners while those on the Nasdaq maintain a more than 2-to-1 margin.
Further underscoring the positive bias has been a 6% drop on the VIX (CBOE Volatility Index) and a 4% decline on the VXN (CBOE Nasdaq Volatility Index). Known as "investor fear gauges," declines on both indexes suggest investors are actively buying call options in anticipation that the market's underlying bullish momentum leaves more room for stocks to run. DJ30 +75.04 NASDAQ +21.87 SP500 +9.64 NASDAQ Dec/Adv/Vol 767/2034/710 mln NYSE Dec/Adv/Vol 699/2406/536 mln
11:00 am : Onward and upward remains the driving mantra this morning as oil prices spike to session lows. After tumbling more than 1.4% to $63.51/bbl within the last 30 minutes, crude for June delivery is currently down 1.2% near $63.60/bbl as a report showing that refiners boosted output last week eases concerns about inadequate gasoline supplies heading into summer driving season.
Also noteworthy is the fact that the Energy sector (+0.5%) has not relinquished much in the way of its intraday leadership at all despite oil's downturn. Oil & Gas Drillers (+1.2%) are still among today's best performers after Transocean (RIG 88.40 +2.13), a suggested holding in the Briefing.com Active Portfolio, handily topped Wall Street forecasts last night as Q1 profits more than doubled. The Dow has recently eclipsed the 13,200 level for the first time ever and the S&P 500 is now within four points of hitting 1,500. It hasn't closed above that level since 2000. DJ30 +88.33 NASDAQ +22.21 SP500 +10.66 XOI +0.4% NASDAQ Dec/Adv/Vol 862/2020/582 mln NYSE Dec/Adv/Vol 702/2396/422 mln
10:30 am : Albeit not typically a market mover, March Factory Orders rising a stronger than expected 3.1% (consensus 2.1%), the biggest gain in a year, has given an added boost to stocks and lifted the industrial-heavy Dow even further into unchartered territory. The surprisingly strong rise was due to a modest upward revision to last week's durable goods new orders component to a 3.7% increase from the originally reported 3.4% gain.
While this is moderately good news on the economic front, the trend in orders has weakened of late and remains uncertain, meaning this one month increase does not necessarily mean that manufacturing is back on track. Nonetheless, a market concerned about the pace of economic growth and looking for something other than earnings to support market gains at current valuations has embraced the data.DJ30 +60.54 NASDAQ +17.08 SP500 +7.54 NASDAQ Dec/Adv/Vol 866/1830/376 mln NYSE Dec/Adv/Vol 793/2161/252 mln
10:00 am : The indices are extending their reach to the upside as all 10 economic sectors remain positive. Consumer Discretionary (+0.8%) is pacing the way, getting a big lift from Restaurants (+1.9%), this morning's second best performing S&P industry group. Last night, Yum! Brands (YUM 66.80 +3.68) beat analysts' expectations and raised its 2007 earnings outlook.
Movies & Entertainment (+1.6%), which also ranks among today's top five performers, is providing additional sector support. Time Warner (TWX 21.08 +0.49) is up 2.4% after also raising its full-year guidance while News Corp (NWS 23.49 +0.50) is recouping more than half of the 4.2% it lost yesterday in the wake of its surprise bid for Dow Jones (DJ 55.94 -0.26). Telecom is turning in a similar 0.8% performance while Materials (+0.7%), Industrials (+0.5%), and Energy (+0.5%) round out today's top five from a sector standpoint. DJ30 +47.58 NASDAQ +9.64 SP500 +5.20 NASDAQ Dec/Adv/Vol 1065/1448/166 mln NYSE Dec/Adv/Vol 1092/1530/80 mln
09:40 am : Decent follow-through seen at the onset of trading as participants embrace another round of better than expected earnings reports across a wide array of industry groups and more takeover activity. With regard to the latter, the Dolan family has confirmed it will acquire 100% of the public interest in Cablevision Systems (CVC 35.67 +3.00) for $36.26 per share (or $10.5 bln) in cash. That represents a roughly 20% premium to the family's previous offer. Speculation that News Corp's (NWS 23.43 +0.44) unsolicited bid yesterday for Dow Jones (DJ 55.95 -0.25) may start a bidding war is also contributing to the positive disposition.
Be that as it may, with economic numbers taking on increasing importance now that roughly two thirds of the S&P 500 has reported quarterly results, early market gains are modest in scope as investors look for other catalysts to justify the market's sizable gains of late.
DJ30 +30.97 NASDAQ +5.53 SP500 +3.59 NASDAQ Vol 90 mln NYSE Vol 46 mln
09:15 am : S&P futures vs fair value: +1.5. Nasdaq futures vs fair value: flat.
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