Dean, Pulte Gains Offset Apollo Dive In S&P ETF


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Robust gains inDean Foods ( DF ) and homebuilderPulte Group ( PHM ) offset a sharp sell-off in for-profit educatorApollo Group ( APOL ) on Wednesday, as the major stock-market ETFs turned in mixed performances by midday.

The three companies are in the S&P 500. In afternoon trade, SPDR S&P 500 ( SPY ) added 0.5% to 146.276. It continued to rebound after finding support at its key 50-day moving average, which is bullish.PowerShares QQQ ( QQQ ), tracking the 100 largest nonfinancial stocks on the Nasdaq, was flat at 68.12. It's struggling to break back above its 50-day line and is looking bearish.

SPDR Dow Jones Industrial Average (DIA) shed 0.1% to 135.44. It's holding above price support at its 50-day line, which means its uptrend remains intact.

More Buybacks Bullish For Stocks

Thanks to near-zero interest rates and more quantitative easing, companies are borrowing money to buy back their own shares, in turn pushing stock-market prices higher, Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in his daily client note Wednesday.

"Corporations repurchased $112 billion of their shares during second-quarter 2012, and $402 billion over the past four quarters," he wrote. "Over the past 13 quarters since Q2 2009, when the latest bull market began, buybacks totaled a whopping $1 trillion.

"Corporations could continue to do even more buybacks based on what they did during the previous bull market. During the first 13 quarters starting in Q2 2003, they purchased $865 billion of their own shares. Over the next six quarters through Q3 2007, they purchased an additional $804 billion."

What's more, companies are paying record dividends.

"During Q3, the S&P 500 corporations paid dividends of $70 billion, and a record $267 billion over the past four quarters through Q3," Yardeni wrote. "A significant portion of this money was probably reinvested in the market.

Major Stock Movers

Dean Foods announced that its wholly owned subsidiary, WhiteWave Foods Co., is going to spin off. The Silk soy milk and Horizon Organic dairy-product producer plans to raise up to $320 million in an initial public offering. Dean stock gapped up 13% to 16.93 in three times average volume. It is trading near a 17.91 buy point.

Pulte gapped up 6% to 17.50. It continued its bounce off its 10-week moving average, clearing its previous high of 17.47. Housing starts rose a whopping 34.8% year-over-year and 15% month-over-month in September to a four-year high. The Mortgage Bankers Association said mortgage application volume dropped 14% last week.

"This represents yet another report where the data showed dramatic strengthening to the point of not seeming fully credible," Jim O'Sullivan, chief U.S. economist at High Frequency Economics wrote. "Housing is clearly in recovery mode. Of course, the sector is much less important than it used to be. Total residential investment directly accounts for 2.4% of (gross domestic product) now, down from a 6.3% peak in 2005."

"It seems that, for now, both the European Central Bank and Federal Reserve continue to succeed in their efforts to prop up financial assets through targeted bond and mortgage-backed-securities buying combined with accommodative rates," Waverly Advisors wrote.

Raymond James raised its price target on Pulte and rates the stock outperform. Raymond analysts cut fellow homebuildersMDC Holdings (MDC) andRyland (RYL) to market perform from outperform. They cut Toll Bros. (TOL) to outperform from strong buy.

They raisedEssex (ESS) andMid America (MAA) to strong buy from outperform and liftedEquity Residential (EQR) to outperform from market perform.

IShares Dow Jones U.S. Home Construction (ITB) jumped 3% to 20.67 andSPDR S&P Homebuilders (XHB) climbed 2% to 25.94.

Apollo crashed 21% to an 11-year low of 21.61 in monster volume. Investors flunked its plans to save $300 million by cutting jobs and shutting half its University of Phoenix schools in the face of anemic enrollment. The largest U.S. for-profit college's Q3 earnings plunged 49% year over year, while sales fell 11%.

S&P Capital IQ, Credit Suisse, BMO and Piper Jaffray cut their price targets. Barrington downgraded shares to market perform.

Follow Trang Ho on Twitter @TrangHoETFs .

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

This article appears in: Investing , ETFs
More Headlines for: APOL , DF , PHM , QQQ , SPY

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