Closing Update: Strong Earnings, Deal-Making Add Up to Another Winning Day for Stocks

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Stocks extended their rally to a sixth day, drifting off their best levels in afternoon trade and led by broad gains for healthcare stocks following a $28.5 million asset swap between Novartis AG ( NVS ), GlaxoSmithKline Plc ( GSK ), and Eli Lilly and Co ( LLY ). Market-friendly data along with strong earnings by Netflix ( NFLX ) and Comcast ( CMCSA ) and a positive outlook by McDonald's (MCD) also kept the major market gauges on positive ground.

Deal-making among pharmaceutical companies helped propel healthcare stocks to a market-leading position Tuesday. In pair of transactions, NVS will sell most of its animal-health division to LLY for $5.4 billion while also selling most of its vaccines division to GSK for $7.1 billion. In return, NVS will pay up to $16 billion to acquire new cancer drugs from the other two firms.

Also today, AstraZeneca PLC (AZN) AZN slipped about 3% - giving back a portion of Monday's 8% advance - after reportedly rebuffing a $100 billion takeover offer by Pfizer (PFE). Neither company has commented on the market rumors.

Eearlier today, the Commerce Department reported existing home sales fell 0.2% in March to a seasonally-adjusted annual pace of 4.59 million, still better than the 0.8% drop the Street was expecting. Also, the Richmond Fed manufacturing index today reversed a 7.0 decline last month to record a 7.0-point rise in April, beating expectations for the index to rise to a 0.0 reading this month.

Commodities were mostly higher although crude oil for May delivery settled $2.24 lower at $102.13 per barrel in moderate profit-taking after the front-month contract hit a year-to-date high yesterday. May natural gas was up 4 cents to finish at $4.74 per 1 million BTU. June gold fell $7.10 to $1281.10 per ounce while May silver added 2 cents to $19.36 per ounce. May copper settled a penny higher at $3.05 per pound.

Here's where the U.S. markets stood at end-of-day:

Dow Jones Industrial Average up 65.12 (+0.40%) to 16,514.37

S&P 500 up 7.66 (+0.41%) to 1,879.55

Nasdaq Composite Index up 39.91 (+0.97%) to 4,161.46

GLOBAL SENTIMENT

Hang Seng Index down 0.13%

Shanghai China Composite Index up 0.34%

FTSE 100 Index up 0.85%

UPSIDE MOVERS

(+) RCII, Posts Q1 EPS of $0.57 per share, ex items, beating the Capital IQ consensus by $0.02 per share. Revenue rose 1.7% year over year to $833 million, narrowly trailing the Street view by $7.77 million.

(+) CNC, Per-share Q1 net income of $0.57 bests Capital IQ consensus by $0.12 per share. Revenue rose 31.9% year over year to $3.35 billion, exceeding expectations by around $100 million.

(+) NFLX, Q1 adjusted earnings of $0.86 per share top estimates by $0.04. Revenue climbs 24.0% year over year to $1.27, matching consensus. Projected Q2 EPs of $1.12, ex items, beats by $0.13 per share.

DOWNSIDE MOVERS

(-) MDSO, Q1 earnings of $0.11 per share miss the Capital IQ consensus for Q1 by $0.05 per share. Revenue rose 21% over year-ago levels to $76.6 million, trailing the Street view by $2.95 million.

(-) LXK, Forecasts 2% to 4% decline in revenue during the current quarter, resulting in adjusted earnings of $0.85 per share to $0.95 per share. Analysts are looking for Q2 EPS of $0.94 per share on $856.08 million in revenue.

(-) BEBE, Warns of a steeper Q2 net loss than previous expected after cold weather in many parts of the U.S. hampered sales. Now expects $0.29 per share loss, $0.14 wider than the analyst consensus.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


This article appears in: Investing , Commodities

Referenced Stocks: NVS , GSK , LLY , NFLX , CMCSA

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