Upbeat earnings results and gains in high-growth stocks helped
benchmarks close in the green on Tuesday. Merck, Sprint,
Amreprise Financial and Cummins posted better-than-expected
quarterly results. A fall in consumer confidence and rise in home
prices had little impact on investor sentiment as they are now
focusing on the outcome of the FOMC meeting on Wednesday.
For a look at the issues currently facing the markets, make sure
to read today's
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.5% to close
Tuesday's trading session at 16,535.37. The Standard & Poor
500 (S&P 500) too rose 0.5% to finish at 1,878.33. The
tech-laden Nasdaq Composite Index went up 0.7% to 4,103.54. The
fear-gauge CBOE Volatility Index (VIX) dropped 1.9% to settle at
13.71. Total volume for the day was roughly 6.3 billion shares,
lower than this month's average of 6.6 billion. Declining stocks
were outnumbered by advancing stocks on the NYSE. For 39%
stocks that declined, 58% advanced.
The day's better-than-expected quarterly results had a positive
impact on the benchmarks. Merck & Co. Inc. (NYSE:
) reported first quarter 2014 earnings of 88 cents per share,
well above the Zacks Consensus Estimate of 79 cents. Earnings
improved 3.5% from the year-ago period. Further, Britain's
Reckitt Benckiser Group plc's interest to buy Merck's consumer
health business for nearly $14 billion aided the bullish mood.
Sprint Corporation (NYSE:
) posted narrower-than-expected quarterly loss. The third-largest
U.S. wireless carrier reported first quarter 2014 loss of 4 cents
per share, narrower than the Zacks Consensus Estimate of a loss
of 6 cents per share. Additionally, the first quarter loss
narrowed from the year-ago loss of 21 cents per share.
Ameriprise Financial, Inc. (NYSE:
) posted first-quarter 2014 operating earnings per share of
$2.04, which surpassed the Zacks Consensus Estimate of $1.87 per
share. Moreover, the figure outpaced the prior-year quarter
earnings per share of $1.59.
Cummins Inc.'s (NYSE:
) earnings per share increased 27.1% to $1.83 in the first
quarter of 2014 from $1.44 (excluding special items) reported in
the year-ago quarter. Earnings also surpassed the Zacks Consensus
Estimate of $1.71 per share.
Shares of Merck, Sprint, Ameriprise Financial and Cummins surged
3.6%, 11.3%, 5.8% and 3.9%, respectively.
Internet stocks rebounded after suffering heavy losses on Monday.
Stocks such as Amazon.com Inc. (NASDAQ:
), Facebook, Inc. (NASDAQ:
), Netflix, Inc. (NASDAQ:
), LinkedIn Corporation (NYSE:
) and Yelp, Inc. (NYSE:
) increased 1.3%, 3.6%, 1.8%, 3.5% and 6.1%, respectively.
Overall, the Technology Select Sector SPDR (XLK) gained 0.7%.
Bio-tech stocks such as Gilead Sciences Inc. (NASDAQ:
), Vertex Pharmaceuticals Incorporated (NASDAQ:
) Amgen Inc. (NASDAQ:
) and Biogen Idec Inc. (NASDAQ:
) increased 2.9%, 4.7%, 0.4% and 2.7%, respectively. Overall, the
Health Care Select Sector SPDR (XLV) gained 0.6%.
On the economic front, the Conference Board reported that the
Consumer Confidence Index has dropped from March's 83.9 to 82.3
in April. The drop in consumer confidence was larger than
consensus estimates of a decrease to 82.9. The Present Situation
Index dropped below the key level of 80, to 78.3 in April. The
Expectations Index remained almost unchanged at 84.9 in April
compared with 84.8 in March.
Separately, the S&P/Case-Shiller Home Price Indices revealed
that 20-City composite index, the leading measure of U.S. home
prices, rose 12.9% year on year in February. However, the rate of
growth was down from January's year-on-year rise of 13.2%. Key
housing stocks from the sector such as Lennar Corp. (NYSE:
) and DR Horton Inc. (NYSE:
) decreased 0.3% and 0.7%, respectively. Overall, the SPDR
S&P Homebuilders ETF (XHB) decreased 0.1%.
Investors now eagerly await the outcome of the Federal Reserve's
two-day policy meeting that started on Tuesday. Market
participants are expecting the central bank to trim the monthly
bond purchase program and are also looking for direction as to
when the Fed will raise interest rates.
In March, the Federal Open Market Committee had decided in its
policy meeting to 'modestly' reduce the pace of its bond purchase
program. The Fed also said despite the harsh winter weather in
the months of January and February, the economy had recuperated
enough to withstand a reduction in bond purchases. The central
bank agreed to trim purchase of its U.S. Treasuries and
mortgage-backed securities by another $10 billion starting April,
bringing the bond-buyback program to $55 billion.
Also, in March, the Federal Reserve Chairwoman Janet Yellen had
commented that interest rate hikes might happen in about six
months after the end of the economic stimulus plan. The
quantitative easing program is expected to end this fall.
Seven out of 10 sectors of the S&P 500 ended in the green.
The Financial Select Sector SPDR (XLF) led the advance as the
sector rose almost 1.0%. Key stocks from the sector such as Wells
Fargo & Company (NYSE:
), JPMorgan Chase & Co. (NYSE:
), Bank of America Corporation (NYSE:
), Citigroup Inc. (NYSE:
) and American Express Company (NYSE:
) increased 1.1%, 1.1%, 1.9%, 1.8% and 0.8%, respectively.
AMGEN INC (AMGN): Free Stock Analysis Report
AMERIPRISE FINL (AMP): Free Stock Analysis
AMAZON.COM INC (AMZN): Free Stock Analysis
BIOGEN IDEC INC (BIIB): Free Stock Analysis
CUMMINS INC (CMI): Free Stock Analysis Report
D R HORTON INC (DHI): Free Stock Analysis
FACEBOOK INC-A (FB): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
LENNAR CORP -A (LEN): Free Stock Analysis
LINKEDIN CORP-A (LNKD): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
NETFLIX INC (NFLX): Free Stock Analysis
SPRINT CORP (S): Free Stock Analysis Report
VERTEX PHARM (VRTX): Free Stock Analysis
YELP INC (YELP): Free Stock Analysis Report
To read this article on Zacks.com click here.