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Stocks Moving Higher On Upbeat Earnings News - U.S. Commentary

Stocks have moved mostly higher during trading on Tuesday, regaining some ground after ending the previous session firmly in the red. The markets have benefited from a positive reaction to the latest earnings news as well as a mixed batch of U.S. economic data.

While the Dow and the S&P 500 have climbed firmly into positive territory, the tech-heavy Nasdaq is nearly unchanged. The Nasdaq is down 1.08 points or less than 0.1 percent at 2,969.37, while the Dow is up 101.22 points or 0.8 percent at 13,028.39 and the S&P 500 is up 6.64 points or 0.5 percent at 1,373.58.

The strength that has emerged on Wall Street is partly due to upbeat earnings news from some big-name companies, with telecom giant AT&T (T) up by 3.6 percent after reporting first quarter earnings that exceeded analyst estimates

Diversified manufacturer 3M (MMM) is also trading higher after the Dow component reported better than expected first quarter earnings. The company also tightened the guidance range for its full-year earnings.

On the other hand, shares of Netflix (NFLX) have come under pressure after the company reported a narrower than expected first quarter loss but forecast slower subscriber growth for its U.S. video-streaming service.

Traders are also digesting some key economic data, including a report from the Commerce Department showing that new home sales fell in the month of March but still came in well above economist estimates.

The report showed that new home sales fell 7.1 percent to an annual rate of 328,000 in March from an upwardly revised February rate of 353,000. Despite the drop, sales came in above economist estimates for a rate of 318,000.

A separate report from the Conference Board showed that U.S. consumer confidence was virtually unchanged in the month of April

The Conference Board said its consumer confidence index edged down to 69.2 in April from a downwardly revised 69.5 in March. Economists had expected the index to slip to 69.7 from the 70.2 originally reported for the previous month.

Nonetheless, trading activity is relatively subdued ahead of the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

Sector News

Housing stocks have shown a strong move to the upside on the heels of the new home sales report, driving the Philadelphia Housing Sector Index up by 3.1 percent. Radian Group (RDN), KB Home (KBH), and PulteGroup (PHM) are posting notable gains.

Considerable strength has also emerged among oil service stocks, as reflected by the 2 percent gain being posted by the Philadelphia Oil Service Index. Baker Hughes (BHI) is leading the sector higher after reporting better than expected first quarter results.

Airline, steel, and defense stocks are also seeing significant strength after moving notably lower over the course of the previous session.

Meanwhile, health insurance stocks continue to post notable losses, resulting in a 1.4 percent drop by the Morgan Stanley Healthcare Payor Index. Internet and software stocks are also under pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. While Japan's Nikkei 225 Index fell by 0.8 percent, Hong Kong's Hang Seng Index ended the day up by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. The French CAC 40 Index jumped by 2.3 percent, while the German DAX Index advanced by 1 percent, and the U.K.'s FTSE 100 Index rose by 0.8 percent.

In the bond market, treasuries have given back some ground following yesterday's strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 1.954 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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