Strong earnings from Caterpillar (
) drove the stock up 4.2% to a new 52-week high yesterday. And
CAT's advance also enabled the Dow Jones Industrial Average (
) to close at a small gain. But the other major indices fell
modestly due to a broad sell-off in the financial sector.
Financials fell 1.7%, with Citigroup (
) off 5.1%, Goldman Sachs (
) and Morgan Stanley (
) off more than 3%, and JP Morgan Chase (
) off 2.3%. And BlackRock (
) was crushed by a fall of 8.6% following an earnings
Citigroup's fall was attributed to the Treasury's authorized
sale of 1.1 billion shares of its stock, which is part of the
government's total holdings of 7 billion shares.
One of the few sectors that gained yesterday was consumer
discretionary, which was up 0.6%. It was a 10% gain in Whirlpool (
) that helped the sector, as the appliance maker said that its Q1
net income more than doubled. Whirlpool raised its 2010 earnings
outlook following gains in revenues and profit margins.
Other gains included car rental stocks due to an announcement by
Hertz Global Holdings (
) of plans to acquire Dollar Thrifty Automotive Group (
) for $1.27 billion.
And insurance stock Humana (
) reported better-than-expected earnings, but its stock fell
The U.S. dollar rose modestly against the euro as more talk of a
possible default by Greece took center stage in Europe. The 10-year
Treasury note closed at a yield of 3.813%.
At the close, the Dow rose less than a point to 11,205, the
S&P 500 (
) fell 5 points to 1,212, and the Nasdaq (
) lost 7 points to 2,523.
The NYSE traded 1.2 billion shares with decliners ahead of
advancers by 10-to-9, and the Nasdaq exchanged 645 million shares
with less than 100 decliners over advancers.
Crude oil for June delivery fell 56 cents to $84.56 a barrel as
traders' fear that an interest rate hike may be announced this
afternoon. The Energy Select Sector SPDR (
) fell 21 cents, closing at $61.88.
June gold gained 30 cents to close at $1,154 an ounce. The PHLX
Gold/Silver Sector Index (
) gained .06 points at 172.49.
What the Markets Are Saying
There was little in the way of technical developments yesterday,
except for the Dow's intraday advance to above the
62% level at 11,245. It closed at 11,205, barely eking out a gain
while the other key indices lost fractionally.
So the inching forward process continues -- and probably will
continue until some unfavorable news surprise leads to a
On the bond front, it is worth noting that corporate credit has
been getting stronger, and that is good for stocks, as well as
bonds. A measurement of the improvement in bonds is that the
high-yield default rate, at 10.9% in March, is expected to fall to
3.1% by December, according to CNBC. Spreads in that market have
already begun to narrow, indicating a pickup in trading and
especially in demand.
And with nearly 35% of the S&P's companies having reported,
almost 82% have exceeded analysts' earnings estimates. If earnings
continue at that pace, the stock market should easily rise
following a correction.
For now, though, buying
high-yield bonds and bond funds
might be a way to bring in some above-average income and also land
a gain while the market adjusts lower.
Today's Trading Landscape
Earnings to be reported before the opening
3M, A.M. Castle, Affiliated Managers, AGCO Corp., Amedisys,
American Ecology Corp., Amerigon, Ametek, Anixter, Ashland,
Autoliv, Automatic Data, Avery Dennison, BE Aerospace, BP plc,
Capella Education, Carlisle Companies, Carpenter Technology,
Celanese, Centene, Ceradyne, Cirrus Logic, CIT Group, Coca-Cola
Enterprises, Convergys, Corn Products, Cummins, Daimler AG,
Diebold, Duncan Energy, DuPont, EarthLink, Ecolab, Energizer,
Entegris, Enterprise Products, Estee Lauder, Ford Motor, FPL Group,
G&K Services, Group 1 Automotive, HCP, Heidrick &
Struggles, Hospira, ICON plc, Iconix Brand, Imation, KC Southern,
Kinetic Concepts, Landauer, Lazard, LCA-Vision, Lennox
International, Lexmark, Lincoln Electric, McGraw-Hill, National
Oilwell Varco, NBTY, Newmont Mining, Nexen, Office Depot,
optionsXpress, Pentair, Pinnacle, Potlatch, Signature Bank, Sonic
Automotive, Spartan Motors, Stanley Black & Decker, Taiwan
Semiconductor, Teleflex, Tellabs, Tyco, U.S. Steel, UAL, Under
Armour, UPS, US Airways, Valero Energy, VASCO Data Security,
Wabtec, Waddell & Reed, Waters, Western Union, Whirlpool,
Whitney Holding and Wright Express.
Earnings to be reported during trading hours
Earnings to be reported after the close include:
Aflac, Aftermarket Technology, AMAG Pharmaceuticals, American
Campus Communities, Amkor, Anadys Pharmaceuticals, Arris, B&G
Foods, Basic Energy Services, Blackbaud, Boston Properties,
Broadcom, Buckeye Technologies, Buffalo Wild Wings, CB&I,
Century Aluminum, Compass Minerals International, Concurrent, CTS
Corp., DaVita, Delphi Financial, Dreamworks Animation, DTE Energy,
East West Bancorp, Encore Capital, EPIQ Systems, Exactech, Fidelity
National Information Services, First Industrial Realty,
Flextronics, GulfMark Offshore, Harleysville Group, Hutchinson,
Interactive Intelligence, JDA Software, Jones Lang LaSalle, Kona
Grill, Life Technologies, Lithia Motors, Manitowoc, Mercury
Computer, MIPS Technologies, Montpelier Re Holdings, Nalco,
National Instruments, New Alliance Bancshares, Norfolk Southern,
Panera Bread, Parametric, Parexel, Phase Forward, Portfolio
Recovery Assoc, Questar, RadiSys, Range Resources, RenaissanceRe,
RF Micro Devices, Robert Half, Rock-Tenn, Silicon Image, Sunoco
Logistics, Super Micro Computer, Switch & Data, Torchmark Corp,
Trustmark, Ultimate Software, USANA, Vitran, Waste Services and
Economic reports due:
ICSC-Goldman Sachs store sales, Redbook, S&P Case-Shiller home
price index, consumer confidence (the consensus expects 53.5), and
State Street Investor Confidence Index.
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