"Economic data was mostly light -- the Empire State manufacturing survey was the lone 'A-list' item, and topped expectations -- and there were no major earnings reports," stated Schaeffer's Trading Analyst Peter Bryans. Aside from a slew of M&A activity, "It was a rather slow day," with the major market indexes dancing around breakeven for most of the session. The Dow Jones Industrial Average (DJIA) ultimately resolved to the upside, though, inching 5 points higher.
Continue reading for more on today's market, including
- Tesla Motors Inc's ( TSLA ) offer to extend its patented technology to other car companies is already drawing interest from the likes of BMW and Nissan.
- Is Microsoft Corporation ( MSFT ) about to hit a fresh 14-year high ? These short-term call buyers certainly think so.
- Option bulls continued to flock to Apple Inc. ( AAPL ), confident the stock will sustain its recent momentum through week's end.
- Plus ... Merger mania, a change of heart among homebuilders, and continued optimism from Cree Inc. ( CREE ) speculators.
Trading Topic of the Week -- Reasons to Dodge Directional Risk Increase the odds of a winning trade . All other things being equal, a straddle is more likely to end up a winner than an at-the-money call or put -- the strategy boasts a 42% win rate, compared to roughly 34% for a directional play.
The Dow Jones Industrial Average (DJI - 16,781.01) explored both sides of breakeven, but eked out a gain of 5.3 points, or less than 0.1%, by the close. Sixteen of the Dow's 30 blue chips ended higher, led by The Home Depot, Inc.'s ( HD ) 1.1% rise. UnitedHealth Group Inc. (UNH) paced the declining minority, shedding 1.5%.
The S&P 500 Index (SPX - 1,937.78) followed a similar path, settling a wishy-washy session with a gain of 1.6 points, or about 0.1%. The Nasdaq Composite (COMP - 4,321.11) fared the best of its peers, advancing 10.5 points, or 0.2%.
The CBOE Volatility Index (VIX - 12.65) spent the session comfortably higher, tacking on 0.5 point, or 3.9%, by the bell.
A Trader's Take
"Futures were lower ahead of the bell, likely due to the situation in Iraq," added Bryans. "However, the S&P 500 muscled into positive territory, and the Russell 2000 Index (RUT) remains higher year-to-date."
5 Items on Our Radar Today
- The International Monetary Fund (IMF) lowered its 2014 outlook for the U.S. today, saying the domestic economy will grow by 2% this year, versus earlier expectations for a 2.8% growth pace. IMF economists also expect longer-term economic growth to average around 2% for the next few years, with full employment not emerging until late 2017. (Bloomberg)
- It was another Merger Monday, with a handful of companies making large buyout bids. Among them Medtronic, Inc. (MDT) bid on Covidien plc (COV) for nearly $43 billion in cash and stock, while Williams Companies, Inc. (WMB) offered $6 billion to merge with Access Midstream Partners LP (ACMP) (The Boston Globe; Bloomberg)
- Industrial production rose by a better-than-expected 0.6% last month after edging 0.3% lower in April, the Federal Reserve reported. Capacity utilization, meanwhile, hit 79.1%, its highest reading in nearly six years. In other economic news, the National Association of Home Builders/Wells Fargo homebuilder confidence index ticked 4 points higher this month to 49. Readings south of 50 indicate that the majority of builders view the current market as unfavorable (versus favorable). (USA Today; Reuters)
- Despite its technical travails, Cree, Inc. ( CREE ) remains a recent favorite among speculative bulls, a trend that was seen again on Friday.
- Amazon.com, Inc. (AMZN) suffered a price-target cut this morning, and more could be on the way, given the current analyst landscape.
For a look at today's options movers and commodities activity, head to page 2.
Oil futures pulled back from a nine-month high today, after analysts said it was unlikely that violence in Iraq would halt crude production in the region. By the close, July-dated oil gave up a penny to end at $106.90 per barrel.
On the other hand, August gold futures extended their winning streak, tacking on $1.20, or 0.1%, to finish at $1,275.30 an ounce.
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