Stocks Higher Ahead Next Week's Earnings; Economic Data Supports
Stocks are seeing some support as the week draws to a close, supported by economic data showing a rise in consumer sentiment and tame inflation, excluding gas and food, which seemed to encourage market bulls. Also, investors are looking ahead to next week when corporate earnings season kicks into high gear.
U.S. consumer prices rose 0.5% in March, with higher gas and food costs accounting for three-quarters of the increase, according to Labor Department data. Core prices, which strip out volatile food and energy costs, rose 0.1%, the government reported Friday. Economists surveyed by MarketWatch had forecast CPI to rise 0.5% overall, with a 0.2% increase in the core rate.
Consumer prices are up 2.7% over the last 12 months. In a separate report, Labor said real average hourly earnings of U.S. workers fell by 0.6% in March, owing to the increase in higher consumer prices. Also, the Empire State manufacturing survey rose for a fifth consecutive month in April, with general business conditions increasing over four points to a reading of 21.7, the Federal Reserve Bank of New York said. It's the highest reading in a year.
The Thomson Reuters/University of Michigan index of consumer sentiment climbed to 69.6, from last month's 67.5 reading and topping economists' expectations for a rise to 68.8, according to a Bloomberg News survey. Among consumer-oriented stocks, WMT is flat, BBBY os up 0.7%, TGT is up 0.7%, DIS is up 0.7%.
In company news:
Pfizer ( PFE ) today announced that in the top-line results from its ORAL Scan Phase 3 study, the rheumatoid arthritis drug, tofacitinib, was able to meet all primary endpoints at a 10 mg twice daily dose. Some analysts anticipate that tofacitinib, if approved, could earn peak annual sales of $2 billion or more. It will compete with rheumatoid arthritis drugs by Abbott Laboratories ( ABT ), Amgen ( AMGN ) and Johnson & Johnson ( JNJ ) Reuters reported.
Oracle Corp. ( ORCL ) today announced its intention to no longer offer commercial versions of Open Office, instead making OpenOffice.org into an open source project that is community-based. This is a reaffirmation of Oracle's continued support of adopting, developing and supporting open source products.
Shares of Merck & Co. (MRK) are higher after the drug maker announced a tender offer for all outstanding shares of Inspire Pharmaceuticals (ISPH) for $5.00 per share in cash without interest and less any applicable withholding taxes. In a statement, Merck said Warburg Pincus Private Equity, which owns approximately 28 percent of the outstanding shares of Inspire, has agreed, among other things, to tender all of its shares in the tender offer.
Bronco Drilling (BRNC) is higher after its says it will be bought by Chesapeake Energy (CHK) for $11 per share cash, or approximately $315 million, including debt, net working capital and outstanding warrants.
Altria Group's (MO) Philip Morris USA announced today that it has made its annual Master Settlement Agreement payment of approximately $3.5 billion. The amount includes approximately $267 million that Philip Morris disputes it owes as a result of the 2008 Non-Participating Manufacturer Adjustment.
Goldman Sachs (GS) shares are down as Bloomberg reports that US government prosecutors indicated they were willing and ready to call Goldman president Gary Cohn as a witness to rebut the defense of Galleon Group LLC co-founder Raj Rajaratnam's defense in his insider-trading trial.
In earnings news:
--Google (GOOG) is down after it reported late Thursday Q1 revenue of $8.58 bln, up 27% vs. year ago levels. Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $2.04 billion in the first quarter of 2011, compared to TAC of $1.71 billion in the first quarter of 2010. Ex TAC, revenue looks to have been $6.54 bln. Non-GAAP EPS was $8.08 per share, vs. $6.76 per share last year. The Street view was $6.32 bln in revenue and EPS of $8.10 per share.
--Bank of America Corporation (BAC) reported Q1 EPS of $0.17 compared to $0.28 a year ago but below the Thomson Reuters mean analyst estimate for $0.27. Revenue of $27.1 billion is down from $32.3 billion a year ago. The Street looked for $26.69 billion.
Commodities are higher. June gold contracts are up $14, or 0.94%, to $1,486 an ounce while May crude oil contacts are up 1.18%, or $1.28, at $109.39 a barrel.
In energy ETFs, the United States Oil Fund (USO) is up 0.97% to $43.70 and the United States Natural Gas fund (UNG) is down $0.02, or 0.17%, to $11.04.
In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.68% at $144.82. Market Vectors Gold Miners (GDX) is down 0.1% to $61.58. iShares Silver Trust (SLV) is up 1.61% to $41.73.