After The Close - The U.S. equity market turned in a decent performance on the heels of yesterday’s sharp selloff. By the closing bell, the major U.S. equity indexes were nicely higher—though none came close to retracing Monday’s steep losses. Our sense is that the upside was driven by some selective bargain hunting, as once again there was not much encouraging news on either side of the Atlantic that could be credited with pushing the stock market higher. Advancing issues outnumbered decliners on both the New York Stock Exchange and the NASDAQ.
The news from Europe has been anything but heartening for investors these days. Once again, yields on Spain’s debt instruments rose, moving higher after Germany once again balked at a proposed plan to pool euro-zone debt. German Chancellor Angela Merkel said that Europe will not have a shared liability for "as long as she lives.” Earlier this month, Europe’s largest economy rejected the notion of a possible issuance of full "Eurobonds” to help the region’s struggling nations. Trading on the Continent was mixed earlier today, with London’s FTSE and France’s CAC-40 finishing modestly lower, while Germany’s DAX was nominally higher.
The economic news on these shores was not encouraging either. At 10:00 A.M. (EDT), the Conference Board reported that the Consumer Confidence Index, which had declined in May, fell further in June. The Index now stands at 62.0, a five-month low. Not surprisingly, the consumer cyclical sector was the weakest performer of the 12 major groups in the latest session. Likewise, the latest reading on the housing market was nothing to write home about. Specifically, the S&P/Case-Shiller index of property values in 20 cities dropped 1.9% in April from the same month in 2011. However, the same report showed home prices rose in 19 of the 20 cities tracked by the survey—the second month prices have risen in a majority of U.S. cities. All in all, the report was yet another sign housing market is firming. Shares of the large publicly traded homebuilding companies, including those of Lennar (LEN), D.R. Horton (DHI), PulteGroup (PHM), and Toll Brothers (TOL), were notably higher today on this report.
Despite the dearth of positive news from Europe and the mixed U.S. economic news, the buying on Wall Street was broadbased today. All of the 12 major sectors finished in the black, though no sector stood out from the rest of the crowd. Meanwhile, today’s earnings news was mixed. Shares of for-profit education provider Apollo Group (APOL) and specialty chemical products H.B Fuller (FUL) were higher on solid quarterly results, while the stock of Robbins & Myers (RBN) sold off after the equipment maker issued disappointing guidance.
In recent days, large declines in the major stock indexes have been followed by partial recoveries in those metrics. Such trading patterns would suggest that investors are probably still not sure what impact the unsettled situation in Europe will have on the global economy in the months ahead. Recent listless economic data on these shores has done nothing to quell some of the investment community’s growing concerns either. At this moment, trading is suggesting that it may be a rollercoaster ride for investors this summer. - William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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12:30 PM ET - The U.S. stock market opened higher this morning, but has not been able to hold onto its gains. As we pass noon in New York, the Dow Jones Industrial Average is up 18 points; the S&P 500 Index up four points; and the NASDAQ is gaining ten points. The market breadth confirms a mixed tone, as advancing stocks are roughly even with declining issues on the NYSE. The market sectors show little clear direction, as well. Weakness can be found in the capital goods and transportation stocks. There is some strength in the consumer non-cyclical, and services issues.
Technically, the S&P 500 sold off yesterday. However, the trading volumes were not too heavy, which was a good sign. Also, there was some slight half-hearted support for equities later in the session, as bargain hunters moved in warily. For now, the Index seems to have found some support at the 1,310 area.
Meanwhile, the situation in Europe remains a concern, and this is doing little to help the markets in the United States. Rising yields on Spanish and Italian debt suggest that traders see considerable risks in the region. Further, the euro, now at $1.25, was lower again today, also indicating weak sentiment. The major bourses put in a choppy session.
The economic news released in the United Sates today has not been too supportive. The Case-Shiller Home Price Index showed housing prices slipped 1.9% during the month of April. Although this result was a bit better than anticipated, it hardly suggests a strong recovery. More important, the Conference Board’s Consumer Confidence Index came in at 62.0 for the month of June, which was lower than analysts had expected, and below May’s downwardly-revised reading of 64.4. It was likely this report that created some concerns amongst traders in the morning. While the rest of the day will be quiet, tomorrow we get a look at pending home sales, as well as durable goods orders.
In corporate news, shares of Apollo Group (APOL) are up sharply after that company put out a decent quarterly profit report. In the solar sector, LDK Solar (LDK) stock is slipping after that company released a weaker-than-anticipated report. The news should pick up a bit, as we head into the earnings season, and that may help provide some direction for traders. But we are still a couple of weeks from that. - 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 – Media conglomerate News Corp. (NWS) is reportedly considering splitting into two companies, thereby separating its publishing assets (books, newspapers, etc.) from its media and entertainment businesses (television, film, etc.). The stock is trading nicely higher in the premarket.
SBA Communications (SBAC), an independent operator of wireless towers, has agreed to purchase 3,252 tower sites for wireless communications from TowerCo in a deal valued at about $1.45 billon.
In earnings news, the stock of Apollo Group (APOL) is up in pre-market trading after the education services provider reported better-than-expected May-period results and issued an outlook for the August quarter that pleased investors. After the market closes today, mattress maker Sealy (ZZ) and tax service provider H&R Block (HRB) are scheduled to release quarterly financial data. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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Before The Bell - Wall Street started the new week behind the proverbial eight ball. Specifically, stocks lost ground more or less steadily from the opening bell, embarking on at best half-hearted attempts to pare what once had been more than a 180-point deficit in the 30-stock Dow Jones Industrial Average and a 63-point loss in the tech-heavy NASDAQ. By the closing bell, therefore, the Dow was still off by 138 points and the NASDAQ was in the red to the tune of 56 points. It was not pretty by any stretch of the imagination.
Stocks were pummeled on the first day of the new week and the last week of the opening half on continued worries about the fast-eroding situation in the beleaguered euro zone, where Greece is in virtual default and facing the prospect of seeking its way out of the European Union, while soaring bond yields in financially challenged Spain has that weakened nation of the brink of its own need for a bailout. Spain's woes are, in some respects, more serious than those of Greece, due to its sheer size, being the fourth largest economy in the region. Indeed, the third largest euro-zone economy, Italy, is also facing its own challenges and is likewise dealing with rising bond yields. Moreover, even the two largest and presumably strongest members of the EU, Germany and France, have been reporting weak economic numbers, and face the possibility of their own recessions in the months to come.
Against this dour backdrop, our own economic numbers, while notably better than those in Europe, are not sufficiently strong as to make us immune from the proceedings across the sea. As to our economy, it did receive a boost yesterday when the Commerce Department reported a larger increase in sales of new single family homes last month than had been expected. All told, the government reported that such sales rose to an annualized rate of 369,000 residences in May; expectations had been for a more muted 345,000 homes being sold. In April, the rate of sales had been 343,000. While this was the best sales performance in some two years, and the supply of homes continues to come down, this recovery must still be kept in perspective, as the nation had been selling homes at an annual rate of almost 1.4 million in the middle of the last decade.
Meanwhile going forward, we will be getting data later this morning from the Conference Board, a private research group, on consumer confidence. Expectations are that this survey, which is usually tied somewhat to the performance of the stock market, eased a tad in June from its May reading of 64.9.
As to the markets this morning, European shares briefly erased earlier gains before edging somewhat lower for a time this morning. The bourses have now perked up a bit, as worries persist about the debt outlook for Spain. Also, there are concerns about the health of another ailing euro zone member, Cyprus, which is now asking for an aid package. Cyprus is one of the smaller euro-zone members. Meanwhile, the meeting among the finance chiefs of the major EU members now going on in Paris is not expected to yield much in the way of positive results. So there is little wonder that our market has been on the defensive over the past week. As to our futures, they are showing scant gains with about a half hour to go before the start of the new trading day. We think the market will steady itself this morning, as the recent pattern has been for something of a Monday-Tuesday reversal. Thus, with the market off sharply yesterday, stocks could enjoy a modicum of bargain hunting at the outset. But Europe is never far from the minds of U.S. investors. Furthermore, we also have the Consumer Confidence report to get through--and we could be vulnerable to any unpleasant surprises. Accordingly, where Wall Street ultimately ends today, is still very much up in the air. Stay tuned. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
