4:20 pm : A day after only four out of 147 S&P industry groups attracted buyers, stocks bounced back in impressive fashion Friday as virtually every industry group caught a bid.
A sense that Thursday's sizable sell-off was overdone provided the initial source of market support. The Dow, S&P 500, and Nasdaq were down 1.4% on average yesterday but recouped much of those losses today.
With the market's focus shifting away from earnings and back to economic data, today's batch of reports fueling hope that a rate cut might come sooner rather than later also helped the bulls dust themselves off after getting knocked down a day earlier.
Before the bell, the Labor Dept. showed that producer prices eased in April. The closely-watched core rate was unchanged again, pushing the year/year rate to 1.5% and providing evidence that inflation appears to be trending lower. That news was especially good given the Fed's recent reiteration that inflation remains its "predominant" concern.
Also out at 8:30 ET was monthly retail sales. That report also garnered added attention given yesterday's ugly same-store sales reports for April.
At first glance, an unexpected decline of 0.2% in April retail sales and a flat read on sales, ex-autos, echoed concerns about the health of the consumer. However, when combined with the tame inflation read, weak retail sales underscoring further signs of a "moderating" economy (also welcome news for the Fed) left investors buying into the idea that policy makers may have more breathing room to ease rather than tighten.
Bond traders, in contrast, did not subscribe to that notion, as evidenced by selling across the yield curve. Nonetheless, the underlying bullish momentum behind the seven-week rally in equities was too much for sellers to have their voice heard in back-to-back sessions.
All 10 economic sectors finished higher, paced by an Energy sector that erased all of yesterday's 2.0% drubbing without a significant help from oil prices. The more heavily-weighted Technology sector also making Thursday's thumping a memory painted an even more convincing recovery effort on the part of buyers. BTK +1.1% DJ30 +111.09 DJTA +0.9% DJUA +0.8% DOT +1.0% NASDAQ +28.36 NQ100 +1.3% R2K +1.3% SOX +1.2% SP400 +0.9% SP500 +14.38 XOI +1.9% NASDAQ Dec/Adv/Vol 495/1916/1.73 bln NYSE Dec/Adv/Vol 754/2541/1.30 bln
3:30 pm : The market is showing no signs of slowing going into the close. Every index continues to put together a solid advance, with the Russell 2000 on pace to log the best performance among the more closely watched indices. Increased hopes of a Fed rate cut sometime in the near future have breathed new life into small cap stocks, which have underperformed mid and large stocks this year.
With regard to major averages, today's rally now positions the Dow to finish the week higher; but the S&P 500 and Nasdaq are still slightly lower on the week and run the risk of having their five-week winning streaks snapped. DJ30 +98.14 NASDAQ +26.41 NQ100 +1.1% R2K +1.1% SP400 +0.8% SP500 +12.74 NASDAQ Dec/Adv/Vol 610/1790/1.42 bln NYSE Dec/Adv/Vol 860/2416/1.08 bln
3:00 pm : With only an hour left to go, buyers remain in complete control of the action. Albeit still off their session highs, today's market gains are impressive nonetheless since yesterday's sell-off worsening into the close had all the makings of follow-through weakness today.
Even crude futures have gotten a second wind, recently closing near the best levels of the day. Crude for June delivery closed up 0.9% at $62.38/bbl, and that has provided an added spark to an Energy sector (+1.9%) that was already outperforming. Chevron (CVX 79.62 +1.43) recently said it is evacuating hundreds of nonessential personnel from offshore Nigeria operations due to security concerns. DJ30 +83.78 NASDAQ +21.89 SP500 +10.82 NASDAQ Dec/Adv/Vol 604/1792/1.29 bln NYSE Dec/Adv/Vol 880/2367/988 mln
2:30 pm : The major averages are still posting solid gains across the board, but sector leadership now has its first blemish since early this morning. Consumer Staples has recently slipped into the red, now the only sector posting a loss, as Dow component Wal-Mart (WMT 47.44 -0.31) retraces its morning lows. Avon Products (AVP 38.17 -0.73) is the sector's biggest laggard on a percentage basis (-1.9%), now earmarking Personal Products (-1.4%) as today's worst performing S&P industry group.
While the loss of leadership in Staples has attributed to the market's latest pullback, weakness in an area widely known for its defensive characteristics is hardly bearish. Its reversal may also suggest that investment dollars are merely rotating out of safe-haven areas like Drug Retail and Packaged Goods and into more growth-oriented areas such as semiconductors and software. DJ30 +69.01 NASDAQ +18.63 SP500 +9.16 NASDAQ Dec/Adv/Vol 551/1812/1.21 bln NYSE Dec/Adv/Vol 827/2412/930 mln
2:00 pm : More of the same for stocks as market internals remain decidedly bullish. In stark contrast to yesterday's action, when decliners on both the NYSE and Nasdaq held a more than 3-to-1 edge over advancers, advancing issues today hold that same advantage on the Big Board and the Composite. The outsized ratio of up to down volume further underscores the sense of reserve on the part of sellers.
One thing today's bulls lack that Thursday's bears did not, though, is participation. Yesterday, more than 1.0 bln shares were traded on the Nasdaq by 12:00 ET; today, it has taken nearly two hours longer for volume to reach that level and volume appears to waning as traders make their way through the afternoon session and the weekend nears. DJ30 +85.08 NASDAQ +21.29 SP500 +10.85 NASDAQ Dec/Adv/Vol 516/1825/1.10 bln NYSE Dec/Adv/Vol 778/2445/860 mln
1:30 pm : The market's recent hiccup has been short-lived as buyers get back to their winning ways. About 30 minutes ago, reports surfaced of a possible terror threat in Germany, which stalled the bulls' intraday momentum.
However, the German Interior Ministry recently saying the security situation in Germany has not changed and a U.S Counterterrorism official citing no "new urgency" to any terror threat in Germany has sent sellers back to the sidelines. No discernible flight-to-safety bid in bonds, especially heading into the weekend, further discredits the validity of such concerns. DJ30 +98.07 NASDAQ +22.26 SP500 +11.83 NASDAQ Dec/Adv/Vol 566/1754/1.02 bln NYSE Dec/Adv/Vol 808/2392/796 mln
1:00 pm : The indices are off their best levels but still hold on to the bulk of their intraday gains. A recent reversal in Treasuries has taken some steam out of the rate-sensitive Financials sector (+0.5%).
Evidently bond traders aren't very convinced that this morning's economic data will result in a rate cut anytime soon. The yield on the 10-year note (-4/32) has risen two basis points to 4.65% since the last update. DJ30 +77.56 NASDAQ +18.58 SP500 +9.10 NASDAQ Dec/Adv/Vol 510/1786/918 mln NYSE Dec/Adv/Vol 757/2433/712 mln
12:30 pm : The afternoon session kicks off exactly how the morning session began, with stocks posting broad-based gains. The Nasdaq (+0.8%) is still pacing the way higher among the majors. That is understandable since its 1.7% decline yesterday was worse than the 1.1% and 1.4% pullbacks on the Dow and S&P 500, respectively.
The Russell 2000 is turning in an even stronger performance today; but its 0.95% advance merely halves Thursday's 1.9% thumping. On Wednesday, the Russell 2000 closed at an all-time high. DJ30 +90.37 NASDAQ +20.71 SP500 +10.33 NASDAQ Dec/Adv/Vol 516/1773/832 mln NYSE Dec/Adv/Vol 747/2419/640 mln
12:00 pm : Stocks are rebounding across the board midday as investors rally around evidence that gives the Fed more breathing room to ease rather than tighten. It is also worth noting that, in the wake of yesterday's sizable market sell-off, a short-term bounce isn't all that surprising since such pullbacks can typically whet the appetites of bargain hunters.
With the Fed recently saying that inflation remains its "predominant" concern, core PPI for April checking in unchanged for a second straight month has helped alleviate pricing pressures. Combine the tame inflation read with a retail sales report that underscored further weakness in the economy, which is also welcome news for the Fed, and the renewed likelihood of a rate cut coming sooner rather than later has reawakened the bulls.
All 10 economic sectors are trading higher. Energy pacing the way with a 1.6% advance is noteworthy in that the sector is recouping most of yesterday's 2.0% drubbing without much help from oil prices. Crude for June delivery is up only 0.5% near $62.10/bbl which still leaves it 15% lower than where it was a year ago.
Telecom and Materials are also up more than 1.0% on the day; but strong gains from more influential areas like Financials (+0.7%) and Technology (+0.9%) paint a more convincing recovery effort on the part of buyers.
With regard to Tech, NVIDIA Corp (NVDA 35.03 +2.21) is the sector's best performer (+6.7%) after posting another strong quarter. Applied Materials (AMAT 19.72 0.54) is another noticeable mover (+2.8%) after it was upgraded at UBS and earmarks Semiconductor Equipment (+2.0%) as one of today's best performing S&P industry groups.
The rate-sensitive Financials sector is getting a boost from increased hopes of a Fed easing and some upbeat corporate news. Dow component American International Group (AIG 72.73 +0.53) handily topped Wall Street estimates last night. Chicago Mercantile (CME 532.20 +34.25) is soaring 6.9% after sweetening its bid for CBOT Holdings (BOT 199.62 +5.62) by 16% and announcing a $3.5 bln buyback. Mortgage lenders are also catching a bid as takeover speculation surrounding Countrywide Financial (CFC 41.13 +1.18) makes the rounds for the second time in five months. BTK +1.0% DJ30 +93.99 DJTA +0.7% DJUA +0.5% DOT +0.6% NASDAQ +20.28 NQ100 +0.9% R2K +0.9% SOX +0.9% SP400 +0.6% SP500 +10.59 XOI +1.5% NASDAQ Dec/Adv/Vol 465/1781/720 mln NYSE Dec/Adv/Vol 652/2470/552 mln
11:30 am : The major averages continue to turn in a respectable performance, as the bulk of industry leadership remains positive. However, while stocks are exhibiting a healthy bounce, the market still has a ways to go before it recoups all of Thursday's extensive damage.
The Tech sector has seen almost all of yesterday's 1.1% pullback erased and Financials has halved its recent 1.4% slide. Health Care's 0.4% advance, though, has barely made a dent in its 1.9% drubbing a day earlier. DJ30 +96.51 NASDAQ +21.67 SP500 +11.23 NASDAQ Dec/Adv/Vol 402/1815/622 mln NYSE Dec/Adv/Vol 589/2504/470 mln
11:00 am : Onward and upward remains the driving mantra this morning as buyers remain an active bunch. The renewed optimism throughout Financials (+1.0%) continues to be the anchor behind today's reflex rally while sharp gains in Tech (+0.8%), Telecom (+1.2%), and Materials (+0.9%) are also noteworthy.
However, it would be remiss not to cite an impressive 1.7% advance in Energy, without surging oil prices as a catalyst no less, as another very supportive factor for the market's rebound. Crude for June delivery is up only 0.2% near $61.95/bbl; but Refiners (+1.8%), Drillers (+1.5%), Integrated Oil (+1.4%), and Explorers (+1.3%) are now among today's top ten best performing S&P industry groups. DJ30 +99.47 NASDAQ +19.18 SP500 +12.27 XOI +1.8% NASDAQ Dec/Adv/Vol 526/1600/422 mln NYSE Dec/Adv/Vol 733/2252/328 mln
10:30 am : Stocks continue to climb, getting their latest lift from a turnaround in Health Care. The sector was under modest pressure earlier due in large part to follow-through selling in Amgen (AMGN 55.39 -1.94). The stock was downgraded by several analysts following yesterday's unfavorable FDA ruling that knocked AMGN shares down more than 9%.
Fortunately for the bulls, Amgen is one of just four components (out 20) in the AMEX Biotechnology Index trading lower. Notable gainers offsetting Amgen's decline include AFFX +1.0%, CELG +1.1%, GILD +1.4%, HGSI +1.6%, IMCL +1.1%, and IVGN +1.8%. BTK +0.5% DJ30 +68.91 NASDAQ +11.67 SP500 +7.88 NASDAQ Dec/Adv/Vol 465/1581/286 mln NYSE Dec/Adv/Vol 823/2075/220 mln
10:00 am : The indices are building on early gains as nine of 10 economic sectors are now in positive territory. Energy (+0.9%), yesterday's worst performing sector (-2.0%), is enjoying the biggest bounce; but a return in leadership from the more influential Financials sector (+0.6%) paints a more accurate picture behind today's recovery.
Increased hopes of a Fed easing obviously bode well for the rate-sensitive sector; but the sector's trading higher on other news as well. Dow component American International Group (AIG 72.71 +0.51) handily topped Wall Street estimates last night while Chicago Mercantile (CME 520.15 +22.20) is surging 4.5% after sweetening its bid for CBOT Holdings (BOT 196.99 +2.99) by 16% and announcing a $3.5 bln buyback. Mortgage lenders are also catching a bid as takeover speculation surrounding Countrywide Financial (CFC 41.16 +1.21) makes the rounds for the second time in five months. DJ30 +53.55 NASDAQ +9.46 SP500 +5.85 NASDAQ Dec/Adv/Vol 309/664/42 mln NYSE Dec/Adv/Vol 592/1994/76 mln
09:40 am : In the wake of widespread profit taking that pushed the Dow, S&P 500, and Nasdaq down 1.4% on average yesterday, stocks are rebounding right out of the gate. While a sense that yesterday's sell-off was overdone attracts bargain hunters, today's economic data are also providing a floor of early support.
With the Fed recently saying that inflation remains its "predominant" concern, core PPI for April checking in unchanged again has pushed the year/year rate to more tolerable 1.5%. Combine the tame inflation read with a retail sales report that further underscores the slowing economy also welcomed by the Fed and investors are back to believing that a rate cut might be coming sooner rather than later. DJ30 +41.54 NASDAQ +8.75 SP500 +4.95 NASDAQ Vol 82 mln NYSE Vol 42 mln
09:15 am : S&P futures vs fair value: +5.2. Nasdaq futures vs fair value: +2.0.
09:00 am : S&P futures vs fair value: +6.0. Nasdaq futures vs fair value: +3.3. Futures indications are off their best levels but continue to trade above fair value, suggesting stocks may recoup some of yesterday's broad-based losses. With the market increasingly concerned about the pace of economic growth, the weak retail sales report is disappointing but not too surprising given yesterday's ugly retail comps.
When combined with the tame inflation read, the retail sales data also actually improve the likelihood of the Fed leaning more toward the rate cut that investors have been anticipating for so long.
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