Markets rebounded from day's initial losses as investors
overlooked weak consumer and labor data to focus on strong
earnings numbers. Also lifting the mood was news that Time Warner
Cable was being bought by Comcast. However, the day's gains were
kept in check as Cisco Systems' dismal sales outlook weighed on
all indices. The gains extended Nasdaq's bullish run into the
sixth day. The Dow and S&P 500 have returned to the green
zone after they ended in the red on Wednesday, which came after
the benchmark's four-day upward rally.
CBS CORP (CBS): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis
CISCO SYSTEMS (CSCO): Free Stock Analysis
GOODYEAR TIRE (GT): Free Stock Analysis
LORILLARD CO (LO): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
TIME WARNER CAB (TWC): Free Stock Analysis
WHOLE FOODS MKT (WFM): Free Stock Analysis
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.4% to close
Thursday's trading session at 16027.59. The Standard & Poor
500 (S&P 500) moved up 0.6% to finish at 1829.83. The
tech-laden Nasdaq Composite Index inched up 0.9% to move up to
4240.67. The fear-gauge CBOE Volatility Index (VIX) dropped 1.1%
to settle at 14.14. Total volume on the New York Stock Exchange
was 3.3 billion shares. Advancers outpaced the decliners on the
NYSE; as for 71% stocks that gained, 25% stocks closed lower.
All three indices opened in the red yesterday. Markets were
witness to two dismal reports, which most likely kept the
benchmarks in negative territory. The U.S. Department of Labor
reported an 8,000 jump in initial claims from prior week to
339,000 for the week ending Feb 8. This also compared unfavorably
with consensus estimate of initial claims coming in at 330,000.
Initial jobless claims measure the amount of filings for state
jobless benefits. A higher number obviously paints a dull picture
for the economy and this data was accompanied by another round of
dismal retail sales numbers. The U.S. Census Bureau announced a
0.4% month-on-month fall in advance estimates of U.S. retail and
food services sales in January to $427.8 billion. This was the
biggest fall since Jun 2012. This was contrary to consensus
estimate of retail sales remaining flat. However, retail sales
rose 2.6% year on year and total sales from Nov 2013 through Jan
2014 improved 3.4% from year-ago period.
However, investors chose to look beyond dismal data and
benchmarks moved into positive territory. Time Warner Cable
) shares gained 7.0% after Comcast Corporation (NASDAQ:
) reached an agreement to buy Time Warner for $45.2 billion. Also
helping to lift the mood were some encouraging quarterly numbers
from The Goodyear Tire & Rubber Company (NASDAQ:
) and CBS Corporation (NYSE:
) among others.
Goodyear's shares jumped 11.5% after it reported an 89.7% surge
in earnings of 74 cents a share in the fourth quarter of 2013.
This also beat the Zacks Consensus Estimate of 63 cents.
Including special items, the company reported a profit of $228
million or 84 cents per share in the quarter, up from the
breakeven achieved a year ago. Goodyear's shares hit their
highest level in about six years.
Separately, CBS continued its strong performance in 2013 and
reported fourth quarter adjusted earnings of 78 cents a share, up
22% year over year and beating the Zacks Consensus Estimate of 76
cents. CBS' shares added 4.5%. However, Whole Foods Market, Inc.
) trimmed its sales forecast for 2014. This was the second
guidance cut in three months and shares of this grocery stores
operator dropped 7.2%.
Also, Cisco Systems, Inc. (NASDAQ:
) projected lower quarterly revenues. Shares of Cisco were down
2.5%; a major drag on the indices. The company expects revenues
to decrease between 6% and 8% year over year for third quarter
fiscal 2014. Non-GAAP gross margin is expected to be 61%-62% and
non-GAAP operating margin is expected to be 26.5%-27.5% of
Benchmarks not only rebounded to green zone from the day's
initial loss but also moved to positive territory after finishing
mostly lower on Wednesday. Wednesday's close in the red, largely
due to a guidance cut from The Procter & Gamble Company
) and Lorillard, Inc.'s (NYSE:
) dismal fourth-quarter results, had halted benchmarks' four-day
bull run. During this four-day positive rally, markets received a
boost after unemployment hit a post-recession low and Fed
Chairwoman Janet Yellen assured interest rates would continue to