DJIA up or down

Dow Average Rises to Record as Jobless Claims Decline
By Inyoung Hwang & Sarah Pringle - Mar 8, 2013 2:21 AM GMT+0800

The Dow Jones Industrial Average climbed to another record high as the number of Americans who filed for unemployment benefits fell to a six-week low, showing further improvement in the labor market.
Bank of America Corp. rallied 2.4 percent as financial stocks advanced. Ciena Corp. (CIEN) and JDS Uniphase Corp. surged at least 7.5 percent as Ciena posted quarterly earnings that topped estimates. Colgate-Palmolive Co. (CL) jumped 0.5 percent after approving a two-for-one stock split and boosting its dividend. PetSmart Inc. (PETM) tumbled 6.9 percent as forecasts for earnings and sales growth missed projections.
The Standard & Poor’s 500 Index (SPX) added 0.2 percent to 1,544.79, the highest level on a closing basis since Oct. 31, 2007, at 11:43 a.m. in New York. The Dow rose 45.92 points, or 0.3 percent, to a record 14,342.16 today. Trading in S&P 500 companies was 12 percent below the 30-day average at this time of day.
“There’s an underlying element of support for the labor market and it’s really driven by housing and potentially construction finally coming back,” Robert Lutts, chief investment officer of Cabot Money Management in Boston, which manages $500 million, said in a telephone interview. “We’re starting to see some health in some of those dormant areas of the economy, so quantitative easing and lower interest rates are finally having an impact and the stock market is of course telling us that.”

First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low.

Jobs Report
A Labor Department report tomorrow may show nonfarm payrolls rose by 163,000 last month, while the unemployment rate held at 7.9 percent, according to economists in a Bloomberg survey.
“The general employment picture in the U.S. has stabilized,” Troy Logan, chief economist at Exton, Pennsylvania-based Warren Financial Service, said. “We’re still at a very high level of unemployment and underemployment, but it’s not getting worse and that’s a key factor.”
The trade deficit in the U.S. widened more than forecast in January as demand for imported crude oil rebounded. The gap grew by 16.5 percent to $44.4 billion from $38.1 billion in December that was the smallest in three years, Commerce Department figures showed today in Washington.

European Economy
European Central Bank President Mario Draghi stuck to his view that the euro-area economy will gradually recover later this year. The ECB today predicted the 17-nation economy will shrink 0.4 percent this year, more than the 0.3 percent contraction forecast three months ago. The central bank lowered its 2014 inflation projection to 1.3 percent from 1.4 percent.
While risks to the economic outlook are on the downside, risks to the inflation outlook remain “broadly balanced,” Draghi said.
The Dow extended a record high yesterday as a private report showed companies hired more workers than estimated and the Federal Reserve said the economy is growing. The S&P 500 has reached its highest level since October 2007, just 1.3 percent below a record as the bull market enters its fifth year.
The benchmark index has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy.

‘Bunker’ Market
“We’ve called this whole market the bunker bull market, meaning people are still in the bunker and not really believing it quite yet,” Brian Belski, the New York-based chief investment strategist at BMO Capital Markets, said in a radio interview with Tom Keene and Michael McKee on “Bloomberg Surveillance.” “When people find out and realize they’re losing money for several months in a row, and they’ll see the positive returns in stocks, they’ll come back.”
Financial companies rallied the most out of 10 S&P 500 groups, jumping 0.5 percent. Twenty-one of 24 members in the KBW Bank Index (BKX) rose, as the gauge climbed 1 percent to its highest level since May 2010. Bank of America, the second-largest U.S. lender, added 2.4 percent to $12.21.
Investors bought shares of companies tied to economic growth, sending material, energy and industrial stocks percent higher among S&P 500 groups. Alcoa Inc. added 0.6 percent to $8.62.

Ciena, JDS
Ciena surged 16 percent to $17.37. The maker of fiber-optic networking equipment reported first-quarter profit of 12 cents a share, compared with a 14-cent loss estimated by analysts on average. Revenue in the period also beat projections. Rival JDS Uniphase added 7.5 percent to $15.22.
Colgate-Palmolive increased 0.5 percent to $115.96. The maker of Irish Spring soap and Ajax house cleaners approved a two-for-one stock split and boosted its dividend 9.7 percent.
Smithfield Foods Inc. rallied 9.5 percent to $24.43. The pork producer posted third-quarter adjusted earnings of 58 cents a share, topping the average analyst estimate of 50 cents.
Time Warner (TWX) Inc. climbed 1 percent to $56.03 after saying its board authorized managers to later this year spin off the magazine unit, which publishes Time, People and Sports Illustrated, into a separate publicly held company. The sale will help Time Warner to focus on its film- and TV-production businesses, Chief Executive Officer Jeff Bewkes said.

Boeing Jumps
Boeing Co. jumped 3 percent to $81.48, its highest intraday level since June 2008. Emirates, the largest operator of Boeing’s 777 aircraft, said the U.S. manufacturer is getting closer to offering a new version that will seek to defend its lead against Airbus SAS in the wide-body market.
Apache Corp. advanced 3.3 percent to $75.96 as the fourth- largest U.S. independent oil and gas producer by market value may begin a process to sell deep-water assets in the Gulf of Mexico as early as next week, a person familiar with the matter said.
PetSmart tumbled 6.9 percent to $61.96 after forecasting sales growth of 2 percent to 4 percent in 2013, implying revenue of $6.89 billion to $7.03 billion. That missed the average analyst estimate of $7.08 billion. The company also forecast earnings of no more than $3.92 a share, compared with the average analyst projection of $3.94 a share.
To contact the reporters on this story: Inyoung Hwang in New York at [You must be registered and logged in to see this link.]; Sarah Pringle in New York at [You must be registered and logged in to see this link.]

U.S. Stocks Little Changed on GDP, Jobless Claims
By Sarah Pringle - Mar 28, 2013 10:02 PM GMT+0800

U.S. stocks were little changed, after the Standard & Poor’s 500 Index rose within a point of its record, as reports showed an increase in jobless claims and economic growth that slowed less than previously estimated.
Deckers Outdoor Corp. rallied 5.2 percent after Jefferies Group Inc. raised its price target. BlackBerry (BBRY) climbed 2.6 percent after reporting fourth-quarter results. Red Hat Inc. tumbled 1.4 percent as sales missed estimates. PVH Corp. (PVH) retreated 3.6 percent after the apparel company forecast earnings will trail current analyst estimates.

The S&P 500 (SPX) rose less than 0.1 percent to 1,563.26 at 9:59 a.m. in New York. The Dow Jones Industrial Average added 20.04 points, or 0.1 percent, to 14,546.20. Trading among S&P 500 shares was 27 percent below the 30-day average at this time of day.
“We’re literally a few weeks away from getting back to earnings season and I think that will certainly bring with it the potential to move into new highs,” Eric Wiegand, a New York-based senior fund manager at U.S. Bank Wealth Management, which oversees $110 billion, said by telephone. “We certainly won’t be surprised to see a little bit of pause here and a reassessment, but if we’re able to see earnings exceed expectations that could certainly be the propellant.”
The S&P 500 rose at the start of trading to within a point of its record of 1,565.15 reached in October 2007. The S&P 500 has traded above 1,560 on eight days since March 14, only to fall short of the record each time. The Dow first surpassed its 2007 all-time high on March 5.

Bull Market
The bull market in equities entered its fifth year this month as the S&P 500 more than doubled from its bottom in 2009, driven by an unprecedented three rounds of bond purchases by the Federal Reserve. The S&P 500 is heading for a quarterly advance of 9.7 percent, its best performance in a year.
Gross domestic product rose at a 0.4 percent annual rate, up from a 0.1 percent prior estimate and following a 3.1 percent pace in the third quarter, revised Commerce Department figures showed today in Washington. The median projection in a Bloomberg survey for the third estimate of fourth-quarter GDP called for a 0.5 percent increase. The slowdown was due to the biggest slump in military spending since 1972 and a reduction in the rate of inventory building.

Jobless Claims
First-time jobless claims rose by 16,000 to 357,000 in the week ended March 23, the highest level in more than a month, Labor Department data showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg called for an increase to 340,000. The four-week average climbed from the lowest level in five years.
Business activity in the U.S. expanded in March at a slower pace than forecast. The MNI Chicago Report’s business barometer fell to 52.4 this month, the lowest level of the year, from 56.8 in February. A reading greater than 50 signals expansion. The median forecast of 48 economists surveyed by Bloomberg was 56.5.
Alcoa Inc. will unofficially kick off the reporting season when it posts first-quarter results on April 8. Of the S&P 500- listed companies that posted earnings for the latest period, 71 percent beat estimates, while 61 percent beat sales predictions, according to data compiled by Bloomberg.
In Italy, Pier Luigi Bersani will tell President Giorgio Napolitano today whether he has managed to form a broad coalition capable of surviving a confidence vote in the Parliament’s upper house. Parliament was deadlocked after last month’s elections when the Democratic Party, which Bersani leads, failed to obtain a majority in the Senate.
Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits.

Deckers, BlackBerry
Deckers surged 5.2 percent to $55.25. Jefferies analyst Randal Konik raised his price target on the Ugg brand owner to $100 from a previous estimate of $65, noting the likelihood of sheepskin prices falling this year.
BlackBerry rose 2.6 percent to $14.95. The company, formerly known as Research In Motion Ltd. (BBRY), reported a surprise profit in the fourth quarter, helped by a cost-cutting program, even as its sales missed analyst projections.
Red Hat lost 1.4 percent to $49.25. The largest seller of Linux operating-system software reported fiscal fourth-quarter sales that missed estimates as some customers --concerned about sluggish economic growth -- put off purchases.
PVH (PVH) retreated 3.6 percent to $108.68. The owner of the Tommy Hilfiger brand said earnings will be $7 a share for the year, less than the average analyst estimate of $7.41 a share.
To contact the reporter on this story: Sarah Pringle in New York at [You must be registered and logged in to see this link.]
To contact the editors responsible for this story: Andrew Rummer at [You must be registered and logged in to see this link.]; Lynn Thomasson at [You must be registered and logged in to see this link.]

Still steadily supporting new heights

U.S. Stocks Rise Amid Earnings Optimism, China Data
By Lu Wang & Lindsey Rupp - Apr 10, 2013 5:19 AM GMT+0800

U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back gain in more than three weeks, on optimism over earnings and as commodities gained amid a report showing China’s inflation slowed.
Raw-materials producers rose 1.1 percent amid speculation that tamed inflation would reduce pressure on Chinese policy makers to tighten credit. Microsoft Corp. and Intel Corp. rallied more than 3.1 percent as investors snapped up technology shares, the worst performing group this year. Alcoa Inc. was unchanged after posting earnings. J.C. Penney (JPM) Co. slumped 12 percent as it ousted Chief Executive Officer Ron Johnson and reinstated his predecessor, Myron E. Ullman III.

The S&P 500 rose 0.4 percent to 1,568.61 at 4 p.m. in New York. The Dow (INDU) Jones Industrial Average added 59.98 points, or 0.4 percent, to 14,673.46, its highest-ever closing level. About 5.8 billion shares changed hands on U.S. exchanges, 8 percent below the three-month average.
“The commodity pop is basically tied to the view on China,” Ralph Shive, the South Bend, Indiana-based manager of the $1.2 billion Wasatch-Large Cap Value Fund, said by phone. “The market is acting strongly. It doesn’t seem to want to go down. You get dips, and they seem to pop right back.”
The S&P 500 has gained 1 percent in the past two days as investors speculated first-quarter earnings would help equities rally. The benchmark index lost 1 percent last week, the biggest decline this year, amid reports showing U.S. payrolls had the smallest gain in nine months in March while manufacturing and services industries expanded less than forecast.

Alcoa Results
Income at S&P 500 companies probably fell 1.8 percent in the first quarter, the first year-over-year drop since 2009, analyst estimates compiled by Bloomberg show. JPMorgan Chase & Co., Wells Fargo & Co. and Bed Bath & Beyond Inc. are among S&P 500 companies scheduled to report earnings this week.
Alcoa, the first company in the Dow to release results this season, reported earnings that exceeded analysts’ estimates while revenue trailed projections. The company cited lower metal prices and the impact of smelter curtailments in Spain and Italy for the decline in sales. The shares swung between gains and losses of 1.3 percent today before closing unchanged at $8.39.
“Analyst estimates might be a little pessimistic at this point,” Eric Teal, chief investment officer at First Citizens BancShares Inc., which manages $4.5 billion in Raleigh, North Carolina, said in a phone interview. “Earnings will have the potential to surprise on the upside.”
A report from China showed inflation slowed last month from a 10-month high. In the U.S., inventories at wholesalers fell unexpectedly in February as uncertainty about fiscal policy kept business spending in check.

Fed Stimulus
The S&P 500 has more than doubled from its 12-year low in March 2009, helped by the Federal Reserve’s unprecedented bond purchases and three straight years of profit growth.
Fed Chairman Ben S. Bernanke said in a speech yesterday that economic conditions were far from where he would like them to be. The Federal Open Market Committee releases minutes of its March 19-20 meeting tomorrow. After that meeting, Bernanke said further gains in the U.S. labor market were needed for the Fed to consider reducing its monetary easing.
The Chicago Board Options Exchange Volatility Index (VIX), which measures the cost of using options as insurance against declines in the S&P 500, fell 2.7 percent to 12.84 today. The gauge, known as the VIX, is down 29 percent this year and in March reached its lowest level since February 2007.

Commodity Rally
Seven of 10 S&P 500 groups advanced, led by raw-materials producers. Cliffs Natural Resources Inc. (CLF), the largest U.S. iron- ore miner, rallied 8.8 percent to $20.45. Freeport-McMoRan Copper & Gold Inc., the world’s second-biggest copper miner, rose 4.1 percent to $33.76.
U.S. Steel Corp. climbed 4.4 percent to $17.99 while Peabody Energy Corp., a coal producer, added 3.3 percent to $21.01. China is the biggest user of commodities from copper to coal.
Technology companies in the S&P 500 added 0.8 percent. The group has gained 2.8 percent this year, the worst performance among 10 industries. Microsoft, the world’s biggest software company, jumped 3.6 percent to $29.61 today. Intel, the largest chipmaker, rallied 3.1 percent to $21.75.
First Solar Inc. soared 46 percent, the most ever, to $39.35. The solar panel maker forecast 2013 sales (JCP) and earnings that exceeded analysts’ estimates as it begins to recognize revenue for its Desert Sunlight project in southern California.

J.C. Penney
J.C. Penney tumbled 12 percent to $13.93, its lowest level since 2001. The CEO’s departure comes after a dismal first year on the job for Johnson, who arrived with great fanfare after helping create Apple Inc.’s network of stores. Johnson tried to transform most of J.C. Penney’s locations into collections of boutiques and removed sales and coupons in favor of everyday low prices.
Sales in the year ended Feb. 2 plunged 25 percent to $13 billion, the lowest since at least 1987. Ullman, 66, served as J.C. Penney’s chairman and CEO for about seven years before Johnson, 54, took over.
Archer-Daniels-Midland Co., the world’s largest corn processor, dropped 1.8 percent to $32.73 after rival Cargill Inc. reported a 42 percent decline in quarterly profit amid the worst U.S. drought since the 1930s. Cargill is the largest closely held U.S. company.
Herbalife Ltd. slipped 3.8 percent to $36.95. The nutritional-supplements company said KPMG LLP resigned as its independent accountant after finding that a partner allegedly was involved in insider trading in its shares.
To contact the reporters on this story: Lu Wang in New York at [You must be registered and logged in to see this link.]; Lindsey Rupp in New York at [You must be registered and logged in to see this link.]
To contact the editors responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

U.S. Stocks Drop as China Growth Slows, Commodities Slump
By Inyoung Hwang - Apr 15, 2013 11:32 PM GMT+0800

U.S. stocks declined, sending the Standard & Poor’s 500 Index lower for a second day, after China’s economy grew at a slower pace than economists forecast.
Material and energy companies fell the most out of 10 S&P 500 (SPX) groups. Freeport-McMoRan Copper & Gold Inc. (FCX), the largest publicly traded copper producer, and Newmont Mining Corp. tumbled 6.1 percent as commodities slumped to a nine-month low. Citigroup Inc. (C) jumped 2.6 percent as quarterly profit rose 30 percent. Sprint Nextel Corp. surged 14 percent after Dish (DISH) Network Corp. offered to buy the company for $25.5 billion.

The S&P 500 dropped 0.8 percent to 1,576.78 at 11:29 a.m. in New York. The gauge slipped 0.3 percent on April 12 from an all-time high, trimming its biggest weekly advance since January. The Dow Jones Industrial Average erased 87.18 points, or 0.6 percent, to 14,777.88. Trading in S&P 500 stocks was 41 percent above the 30-day average at this time of day.
“The international situation continues to concern people, both in regard to Europe and China,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by telephone. His firm oversees about $208 billion. “People are watching for some signs of improvement in both areas. Otherwise, we’re just in the early stages of earnings season, so people will have one eye on what’s going on outside the U.S. and another maybe closer eye on what’s happening with regard to earnings.”
The S&P GSCI gauge of 24 commodities sank to the lowest level since July as gold tumbled as much as 9.7 percent and silver plunged as much as 13 percent.

China GDP

China’s gross domestic product rose 7.7 in the first quarter from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 8 percent median forecast in a Bloomberg survey of economists and 7.9 percent growth in the fourth quarter. Separate reports showed March industrial production rose less than estimated while retail- sales growth matched forecasts.
European Central Bank President Mario Draghi said monetary policy can’t address the root causes of the sovereign debt crisis and it’s up to governments to enact structural reforms.
“Problems in the euro-area economic landscape still loom large” and “the way out is to restore competitiveness,” Draghi said in a speech in Amsterdam today. “Undertaking structural reforms, budget consolidation and restoring bank balance-sheet health is neither the responsibility nor the mandate of monetary policy.”

Manufacturing Report

In the U.S., data today showed manufacturing in the New York region expanded less than projected in April as orders cooled and sales stagnated. The Federal Reserve Bank of New York’s general economic index dropped to 3.1 this month from 9.2 in March. The median projection of 47 economists surveyed by Bloomberg was 7.
U.S. stocks rallied last week, sending the S&P 500 up 2.3 percent, amid optimism that global stimulus efforts and corporate earnings growth will continue to power the world’s largest economy.
Profits at S&P 500 companies are forecast to drop 1.4 percent in the first three months of the year, according to analyst estimates compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.
“A lot of companies have tried to talk down expectations,” Joseph Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wisconsin, said by phone. The firm manages $3.9 billion. “The bar has been set a little lower and that’s going to help in terms of companies at least beating lowered expectations.”

Raw Materials

Raw-material companies lost 2.6 percent as a group, while energy stocks fell 2.7 percent. Caterpillar Inc., the world’s largest maker of construction equipment, tumbled 2.7 percent to $82.80 for the biggest decline in the Dow. Alcoa Inc., the largest U.S. aluminum producer, slid 2.1 percent to $8.05. Chevron Corp. erased 2.1 percent to $117.45.
Freeport dropped 7.1 percent to $29.65 as Citigroup downgraded the shares to sell from neutral and cut its price estimate by 29 percent to $25. Copper reached a 17-month low in New York. Newmont Mining, the largest U.S. gold producer, retreated 6.1 percent to $34.16 as precious metals also tumbled. Cliffs Natural Resources Inc., the largest U.S. iron-ore miner, also sank, losing 7.7 percent to $17.73.

Homebuilders Slump

All 11 stocks in the S&P Supercomposite Homebuilding Index fell today, as the gauge tumbled 3.4 percent. Ryland Group Inc. decreased 4.3 percent to $37.98. M/I Homes Inc. dropped 3.8 percent to $22.13.
Citigroup increased 2.6 percent to $45.92. The third- biggest U.S. bank said first-quarter profit rose 30 percent as revenue from fixed-income trading and investment banking exceeded analysts’ estimates. Chief Executive Officer Michael Corbat, 52, who oversaw his first full quarter since replacing Vikram Pandit in October, is firing workers and closing branches as he seeks to make Citigroup more efficient.
Goldman Sachs Group Inc. and Bank of America Corp. are also scheduled to post results this week.
Sprint jumped 14 percent to $7.07 after Dish, Charlie Ergen’s satellite-TV company, challenged a bid by Japan’s Softbank Corp. for the third-largest U.S. wireless carrier. Sprint shareholders would receive $7 a share, consisting of $4.76 in cash and stock representing about 32 percent of the combined company. That means the offer is $17.3 billion cash and $8.2 billion stock. Dish slipped 7.4 percent to $34.84.

Life Technologies

Life Technologies Corp. rallied 7.6 percent to $73.16. Thermo Fisher Scientific Inc., the second-biggest maker of life- sciences equipment by market value, agreed to buy Life Technologies for about $13.6 billion in an all-cash deal. Life Technologies makes laboratory equipment that help blueprint DNA. Thermo added 2.3 percent to $81.41.
J.C. Penney Co. (JCP) added 2.1 percent to $14.93. The department-store operator was raised to neutral from underweight by JPMorgan analyst Carla Casella on speculation the company will move to raise capital and possibly equity. The Plano, Texas-based company said in a statement today it has drawn $850 million from a $1.85 billion revolving line, and is working with financial advisers to explore additional capital-raising alternatives.
To contact the reporter on this story: Inyoung Hwang in New York at [You must be registered and logged in to see this link.]
To contact the editor responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

damn the boston bombers!

kppl wrote:damn the boston bombers!

seriously why they even do that..

massive sell off these few days...have to stay low and watch where the market is going...plus we are entering the history sell in May trend....

yea sell in may come back in sept

Cals wrote:yea sell in may come back in sept

come back in sept ah? too long kua

Some recoveries today....

U.S. stocks are higher at mid-day, with positive corporate earnings supporting the sharp move to the upside. Earlier, futures had pointed to more modest gains, as market participants digested weak April purchasing manager's index readings from China and Germany. The Dow is near its day top, pushing 150 points north, with the S&P 500 and Nasdaq posting solid gains as well.

U.S. March new single-family home sales weighed in at 417,000 vs. 421,000 forecast by economists polled by Marketwatch. That number trumped February's total of 411,000, and despite the slight miss, also continued to signal an ongoing recovery in the U.S. housing market.

Other domestic data points had little impact on the markets. A 9:00 a.m. ET release showed that FHFA house prices climbed by 0.7% in February. Also offering little impact, the April U.S. flash manufacturing PMI fell to 52, its lowest reading in 6 months.

More recoveries as jobless claims are abit lower than expected.

This is a good week!

Let's see whether tomorrow's GDP number would be the cherry on top

25th APRIL

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No GDP cherry....

estimated 3.1%, actual 2.5% did not meet estimates....

However....prior was 0.4%....now 2.5%....good increment....

However i still found a cherry

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D.R. Horton profit soars as housing market strengthens
(Reuters) - D.R. Horton Inc , the No.1 U.S. homebuilder, reported a 173 percent jump in quarterly profit and said the spring selling season was off to a strong start, sending its shares up 6 percent before the bell.

U.S. Stocks Rise as ECB Cuts Rate, Jobless Claims Fall
By Inyoung Hwang & Lu Wang - 2013-05-02T15:10:33Z

U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from the biggest drop in two weeks, as the European Central Bank cut its key interest rate and American jobless claims unexpectedly fell.
Facebook Inc. (FB) added 3 percent as the operator of the world’s largest social network reported sales that topped projections. General Motors Co. rose 4.5 percent as it narrowed its first-quarter loss in Europe. MetLife Inc. and Prudential Financial Inc. climbed more than 2.9 percent after the insurers’ earnings beat forecasts.

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Traders work at the New York Stock Exchange in New York. Photographer: Scott Eells/Bloomberg

The S&P 500 rose 0.6 percent to 1,592.49 at 11:07 a.m. in New York. The Dow Jones Industrial Average gained 75.99 points, or 0.5 percent, to 14,776.94. Trading in S&P 500 stocks was 4.6 percent below the 30-day average during this time of day.
“The ECB did the minimum it needed to do,” Michael Strauss, who helps oversee about $25 billion of assets as chief investment strategist at Commonfund Group in Wilton, Connecticut, said by telephone. “Are they way behind the curve? Yes, but it at least showed that they’re recognizing the economic deterioration in the euro zone. The announcement was widely expected but on the margin it provided some help and the jobless claims data provided some help.”
ECB policy makers meeting in Bratislava lowered the main refinancing rate to 0.5 percent from 0.75 percent, a move predicted by 45 of 70 economists in a Bloomberg News survey. “Our monetary policy will remain accommodative for as long as needed” and officials “will monitor very closely all incoming information” in the months ahead, ECB President Mario Draghi said at a press conference. He said the ECB will continue to lend banks as much money as they need at least until mid-2014.
Stock futures pared gains after Draghi said policy makers had an open mind on a negative deposit rate.

Bull Market
The S&P 500 lost 0.9 percent yesterday as U.S. payrolls and manufacturing grew less than forecast. The equity gauge reached an all-time high of 1,597.57 on April 30 as the bull market entered its fifth year. The S&P 500 surged 135 percent from a 12-year low in 2009, driven by better-than-expected corporate earnings and three rounds of bond purchases by the Federal Reserve.
The Fed said yesterday it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as the economy changes.
The number of Americans filing claims for jobless benefits unexpectedly dropped to the lowest level in more than five years, Labor Department figures showed. Other data today showed the productivity of U.S. workers rose in the first quarter as companies focused on containing labor expenses.

Jobs Report
A report tomorrow is projected to show U.S. unemployment stayed at 7.6 percent in April, while payrolls rose 145,000, compared with an increase of 88,000 the prior month, according to the median estimates of economists in a Bloomberg survey.
“The key thing that you need to make people feel OK is to simply add jobs and ideally lower the unemployment rate,” Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, said by phone. His firm manages about $2 billion. “It’s looking like the goldilocks type of scenario where the economy grows, but not too fast for the Fed to stop helping, but not too slow to impede earnings growth.”

Earnings Season
Of the 381 companies in the S&P 500 that have reported results so far, 73 percent exceeded analysts’ earnings predictions while 53 percent missed on sales, data compiled by Bloomberg show. Profit at S&P 500 companies rose 1.1 percent in the first three months of the year, according to estimates compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, or VIX, slid 4 percent to 13.91 today as investors cut demand for protection against losses in the S&P 500. The gauge for options hit a six-year low in March and is down 23 percent this year.
Eight out of the 10 industry groups in the S&P 500 advanced as technology, health-care and industrial companies rose the most, climbing at least 0.9 percent.
Facebook advanced 3 percent to $28.26. First-quarter sales surged 38 percent to $1.46 billion, a sign that Chief Executive Officer Mark Zuckerberg is making headway in a drive to make more money from mobile advertising. Profit excluding certain items was 12 cents a share, compared with an average analyst prediction of 13 cents.

GM Gains
General Motors (GM) gained 4.5 percent to $31.54. The automaker, after losing more than $18 billion in Europe since 1999, narrowed its first-quarter loss in the region, outpacing Ford Motor Co. and helping it beat analysts’ earnings estimates.
MetLife added 2.9 percent to $39.51. The largest U.S. life insurer reported a first-quarter profit compared with a year- earlier loss as Chief Executive Officer Steven Kandarian expands outside the U.S. Kandarian is searching for customers in faster- growing economies and reducing expenses as slow expansion in the company’s main markets weighs on results.
Prudential rose 7.6 percent to $63.79. The No. 2 U.S. life insurer also posted results that exceeded analysts’ estimates.
Visa (V) Inc. climbed 6.6 percent to a record $176.91. The biggest payments network posted a quarterly profit that beat analysts’ estimates as spending on credit and debit cards rose.
Gilead Sciences Inc. climbed 5.2 percent to $52.76. The company said it plans to begin further study evaluating a therapy for the treatment of chronic hepatitis C.
Yelp Inc. rallied 25 percent to $31.50 after the consumer- review website reported first-quarter revenue that topped estimates, helped by an expansion into new markets and a jump in local advertising.
International Paper (IP) Co. slipped 3 percent to $44.53. The world’s largest maker of office paper reported operating profit of 65 cents a share in the first quarter. That trailed the average analyst estimate of 74 cents in a Bloomberg survey.
To contact the reporters on this story: Inyoung Hwang in New York at [You must be registered and logged in to see this link.];
To contact the editors responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

Its going to be a quiet week....nothing much in the economic calendar besides jobless claims....

how was last weeks NFP?

Non Farm Payrolls was very good!

The numbers are still soft but April employment beat expectations and there were upward revisions. Total payroll jobs in April increased a somewhat improved 165,000 after rising a revised 138,000 in March (originally up 88,000). Market expectations were for a 153,000 gain for April. The net revisions for February and March were up 114,000. The unemployment rate slipped to 7.5 percent from 7.6 percent in March. Analysts forecast a 7.6 percent unemployment rate.

Turning back to payroll data, private payrolls gained 176,000 after rising 154,000 in March (originally 95,000). Expectations were for a 175,000 boost.

In the private sector, relative strength again was in the private service-providing sector. Service-providing jobs increased 185,000 after a 139,000 rise in March. The April boost was led by subcomponents for temporary help services (up 31,000), professional and technical services (up 23,000), and management of companies (up 7,000), leisure and hospitality (up 43,000), retail trade (up 29,300), and health care & social assistance (up 26,100).

Goods-producing jobs were disappointing, declining 9,000 (rounded) after a 15,000 rise in March. Construction decreased 6,000 in the latest month with mining dipping 4,000. Manufacturing employment was unchanged.

Government jobs declined 11,000 in April, following a decrease of 16,000 the prior month.

Wages improved after a lousy March. Average hourly earnings rose 0.2 percent, following no change in March. The median forecast was for a 0.2 percent advance. On the negative side, the average workweek edged down to 34.4 hours in April from 34.6 hours the month before. The market consensus was for 34.6 hours.

Turning to detail for the household survey, household employment in April rebounded 296,000 after a 260,000 drop the month before. The labor force increased 210,000, following a 496,000 drop in March.

Overall, the bottom line is that the labor market is not as scary as reported in March. However, it is still soft but a little better than forecast. This report likely will not change Fed thinking on quantitative easing as unemployment is still high and job growth is still sluggish.

On the news, equity futures firmed.

U.S. Stocks Advance on Central Bank Optimism, Earnings
By Inyoung Hwang - May 8, 2013 12:36 AM GMT+0800

U.S. stocks rose, sending the Dow Jones Industrial Average (INDU) above 15,000 for the second time in a week, on optimism over global central bank stimulus and better- than-estimated earnings from DirecTV and Fossil Inc.
Nine out of 10 groups in the Standard & Poor’s 500 Index rose. DirecTV gained 6.3 percent after adding more subscribers than analysts projected. Fossil advanced 8.8 percent after profit beat estimates and the company lifted its forecast for the year. EOG Resources Inc. (EOG) jumped 8.1 percent after seeing higher growth rates for crude oil. First Solar Inc. (FSLR) plunged 8.8 percent after earnings fell short of estimates.

The S&P 500 rose 0.3 percent to 1,622.08 at 12:34 p.m in New York. The Dow added 49.26 points, or 0.3 percent, to 15,018.15. The gauge briefly surpassed 15,000 for the first time on May 3. Trading of S&P stocks was in line with the 30-day average at this time of day.
“This is a QE-fueled market,” Steven Bulko, the New York- based chief investment officer of Lombard Odier Investment Management’s $1 billion long/short 1798 Fundamental Strategies Fund, said by telephone. “You’re just not seeing sales based on allocation into any other asset class because of the relative unattractiveness of everything other than equities. That’s putting in place a firm bid to the equities market.”
The S&P 500 advanced 0.2 percent to a record yesterday, after the benchmark gauge for U.S. equities topped 1,600 for the first time on May 3. U.S. stocks are in the fifth year of a bull market amid better-than-estimated corporate earnings and three rounds of bond purchases by the Federal Reserve.

Fed Stimulus
Fed Chairman Ben S. Bernanke has injected more than $2.3 trillion into the financial system since 2008. The Fed is currently buying $85 billion of debt each month under a policy of so-called quantitative easing. Bank of Japan Governor Haruhiko Kuroda last month began a campaign to end falling prices in a bid to reach 2 percent inflation in two years. The European Central Bank cut its main refinancing rate last week.
Global equities rose today as the Reserve Bank of Australia cut its benchmark interest rate to a record low of 2.75 percent. The Bank of England will probably leave its stimulus program on hold this week amid signs the economy has found a firmer footing. A Bloomberg News survey of economists shows policy makers will refrain from expanding quantitative easing beyond 375 billion pounds ($582 billion) on May 9.
“It becomes harder and harder for central banks to be the odd man out,” Steven Soranno, a Bethesda, Maryland-based senior equities analyst for Calvert Investments Inc., which oversees about $12 billion, said by telephone. “The old adage used to be ‘Don’t fight the Fed.’ Now it’s ‘Don’t fight the Feds’, plural. Australia came in with the rate cut and that just adds to the coordinated central bank easing.”

Earnings Season
About 72 percent of the 423 S&P 500 companies that have released results since the start of the earnings season have exceeded profit projections, while 53 percent have missed sales estimates, data compiled by Bloomberg show. Walt Disney Co., Mondelez International Inc. and Electronic Arts Inc. are among 22 companies scheduled to report earnings today.
Phone and industrial companies rallied the most out of 10 S&P 500 groups, gaining at least 0.7 percent. Investors bought shares of stocks most tied to economic growth, sending 24 out of 30 members of the Morgan Stanley Cyclical Index higher. The gauge has rallied 4.4 percent in the last four days.
DirecTV (DTV) jumped 6.3 percent to $61.63. The largest U.S. satellite-television provider added 21,000 U.S. subscribers and 583,000 Latin American customers in the first quarter, compared with the 10,000 and 505,000, respectively, predicted by analysts. The gains may help reassure investors, who have been concerned that growth is sputtering.

Fossil Gains
Fossil surged 8.8 percent to $107.68 for the biggest advance in the S&P 500. (SPX) The maker of the namesake watch brand reported first-quarter earnings were $1.21 a share, exceeding the 97-cent profit estimated by analysts on average. The Richardson, Texas-based company also boosted its earnings forecast for 2013 to as much as $6.26 a share after earlier predicting no more than $6.15.
EOG Resources jumped 8.1 percent to $136.26. The natural- gas and crude-oil producer reported first-quarter profit that beat analysts’ estimates by 52 percent and said it sees “sustained” high growth in rates for oil production through 2017. The Houston-based company also said its sees a moderate increase in North American natural gas next year.
Electronic Arts Inc. (EA) slipped 0.7 percent to $18.16 after earlier climbing as much as 3.1 percent. The second-largest video-game publisher reached a multiyear agreement with Disney to create games based on “Star Wars” characters. Disney said it will retain certain rights to develop new titles within the mobile, social, tablet and online game categories. The media company reports earnings after the close of regular trading.

Urban Outfitters
Urban Outfitters Inc. (URBN) climbed 3.4 percent to $43.06 after Wells Fargo & Co. lifted its rating on the retailer to outperform from market perform.
Tiffany & Co. slumped 0.7 percent to $75.05. Wells Fargo lowered its rating on the world’s second-largest luxury jewelry retailer to market perform from outperform. The San Francisco- based firm also cut its recommendation for teen-apparel chain American Eagle Outfitters Inc. (AEO), which slid 0.3 percent to $19.11.
First Solar tumbled 8.8 percent to $43.51, for the biggest decline in the S&P 500. The largest U.S. solar manufacturer by shipments posted earnings, excluding one-time expenses related to restructuring, of 69 cents a share, or 6 cents less than the average of 17 analysts’ estimates compiled by Bloomberg.
Technology stocks fell 0.4 percent for the only decline among S&P 500 groups. Microsoft Corp., the world’s largest software maker, sank 1.4 percent to $33.28. Cisco Systems Inc. retreated 1.9 percent to $20.42 for the biggest drop in the Dow. IPhone maker Apple Inc. slipped 0.7 percent to $457.52.
Baxter International Inc. erased 3.6 percent to $67.79. The company’s Gammagard failed to help patients with Alzheimer’s disease in a late-stage study, adding to a string of failures to develop a treatment for the most common form of dementia. Baxter will halt all studies of the therapy for mild to moderate forms of the disease and reconsider its Alzheimer’s program, the Deerfield, Illinois-based company said in a statement today.
To contact the reporter on this story: Inyoung Hwang in New York at [You must be registered and logged in to see this link.]
To contact the editor responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

U.S. Stocks Fluctuate as Investors Consider Stimulus Pace
By Inyoung Hwang - May 10, 2013 11:43 PM GMT+0800

U.S. stocks fluctuated between gains and losses, with the Standard & Poor’s 500 Index poised for a third straight week of gains, as investors weighed the pace of central bank stimulus amid a meeting of finance ministers.
Gap Inc. added 5.8 percent, pacing gains with discretionary stocks after forecasting profit that topped estimates. Nvidia Corp. rose 4.1 percent as fiscal first-quarter sales and earnings exceeded projections. Energy companies posted the biggest decline out of 10 S&P 500 groups, as the price of crude fell to a one-week low. Apple Inc., the world’s most valuable company, lost 1 percent.

The S&P 500 rose 0.1 percent to 1,628.23 at 11:42 a.m. in New York. The equity benchmark rallied to a record on five consecutive trading days starting on May 2, and is heading for a weekly gain of 0.9 percent. The Dow Jones Industrial Average fell 2.92 points, or less than 0.1 percent, to 15,079.70 today. Trading of S&P 500 stocks was 9.3 percent below the 30-day average at this time of day.
“People are seeing light at the end of the tunnel,” Larry Kantor, the New York-based head of research at Barclays Plc, said in a radio interview on “Bloomberg Surveillance” with Tom Keene. “We would not be surprised to see a correction but we would be a buyers on dips because of the tremendous monetary policy and the fact that the economy is growing.”
Group of Seven finance ministers start a two-day meeting in Aylesbury, north of London, today. They may not release a formal communique, a Canadian Finance Department official said May 8. Central banks worldwide have announced 511 interest-rate cuts since June 2007, according to a Bank of America Corp. tally done before Vietnam and Sri Lanka lowered their policy rates today.


Scaling Back
U.S. stocks retreated yesterday after the Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s monthly $85 billion in bond purchases as early as the next Federal Open Market Committee meeting, which is scheduled for June 18-19. The FOMC last week said it will maintain its asset-purchase program until the unemployment rate shows significant improvement.
“We’re in the late stages of an accommodative Fed,” Andrew Slimmon, Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney, said by phone. His firm has $1.7 trillion in client assets. “They may change policy next year, so this stock market at some point is going to discount a change in policy. That’s going to temper the bull market in equities. I don’t think that’s going to happen soon. It’s likely going to be next year.”

Bull Market
The U.S. bull market has entered its fifth year. The S&P 500 has surged 141 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed.
Consumer discretionary stocks rallied, gaining 0.6 percent for the biggest advance out of 10 S&P 500 groups. Walt Disney Co. rallied 1 percent to $67.35. Energy companies erased 0.7 percent as the price of crude oil fell 2.7 percent to $93.82 a barrel. Exxon Mobil Corp. dropped 0.9 percent to $90.23, while Chevron Corp. erased 0.8 percent to $122.68.
Gap added 5.8 percent to $41.06 for the largest increase in the S&P 500. The largest U.S. apparel chain forecast first-quarter profit that topped analysts’ estimates. Earnings will be as much as 69 cents a share, exceeding the 56-cent profit projected by analysts on average.
Nvidia climbed 4.1 percent to $14.48 after the maker of graphics processors said net income rose to $77.9 million, or 13 cents a share, in the quarter ended April 28. Sales increased 3.2 percent to $954.7 million. Analysts on average had forecast earnings of 10 cents on sales of $940.7 million.

Priceline Gains
Priceline.com Inc. rallied 4.1 percent to $767.43. The largest U.S. online-travel agent by market value reported reported first-quarter profit and sales that exceeded analysts’ estimates.
Molycorp Inc. surged 20 percent to $6.72 after posting a net loss of 15 cents a share for the first quarter. Analysts had predicted a loss of 30 cents apiece, according to a Bloomberg survey. Revenue of $146.4 million beat the median analyst estimate of $137.3 million.
Apple sank 1 percent to $452.41, after earlier rising as much as 0.6 percent. While the iPhone maker has jumped 16 percent since hitting a 16-month low on April 19, shares failed to stay above their 100-day moving average of $460.43, according to Bloomberg data. Apple closed above the 100-day moving average on May 8 for the first time since October 2012, the data show.

CareFusion Slips
CareFusion Corp. tumbled 4.5 percent, the most in the S&P 500, to $33.08. The maker of medical pumps, ventilators and medicine dispensers said sales for 2013 will be flat to down by a “low” single-digit percent. The San Diego-based company had predicted in February revenue would increase 1 to 3 percent.
Air Lease Corp. slid 3.2 percent to $29.59 after posting first-quarter revenue of $192 million. That trailed the average analyst projection of $196 million.
Hess Corp. fell for the fifth straight day, losing 2.2 percent to $69.40. The oil company that’s in a proxy battle with billionaire Paul Singer’s Elliott Management Corp. will strip Chief Executive officer John B. Hess of the chairmanship after its annual meeting next week. John Krenicki, a company nominee and former CEO of General Electric Co.’s energy unit, will become chairman if he’s elected to the board at the May 16 meeting.
Sotheby’s tumbled 2.8 percent to $35.31. The company’s loss doubled in the first quarter as auction profits fell and expenses rose. The New York auctioneer posted a loss of 33 cents a share, wider than the 12 cents forecast by analysts in a Bloomberg survey.
To contact the reporter on this story: Inyoung Hwang in New York at [You must be registered and logged in to see this link.]
To contact the editor responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

U.S. Stocks Advance on Increased Optimism Over Economy
By Lu Wang & Nikolaj Gammeltoft - May 14, 2013 11:20 PM GMT+0800

U.S. stocks rose, with the Standard & Poor’s 500 Index headed for its eighth record high in the past nine sessions, on increased optimism over growth in the world’s largest economy.
Financial shares climbed the most among 10 S&P 500 industry as hedge-fund manager David Tepper called U.S. banks “a good sector.” Bank of America Corp. and Citigroup Inc. rose more than 2 percent. Take-Two Interactive Software Inc. rallied 4.7 percent after the publisher of the “Grand Theft Auto” video games reported profit that beat analyst estimates.

The S&P 500 advanced 0.8 percent to 1,646.39 at 11:16 a.m. in New York. The Dow Jones Industrial Average gained 72.67 points, or 0.5 percent, to 15,164.35. Trading of S&P 500 stocks was 5.5 percent below the 30-day average at this time of day.
“There’s an encouraging pattern of continued growth in the economic data,” Alan Gayle, a senior strategist at RidgeWorth Capital Management, which oversees about $48 billion of assets, said in a phone interview. “What is helping the market is the belief that downside risks to stocks are limited right now.”
Confidence among small businesses climbed in April to a six-month high as the outlook for the economy and sales brightened, the National Federation of Independent Business’s optimism index showed today.

Still Bullish
Tepper, co-founder and owner of Appaloosa Management LP, said in an interview on CNBC that he is still bullish and the economy is getting better. Tepper, who led Institutional Investor’s ranking of the top earners in hedge funds last year with $2.2 billion, said in January in a Bloomberg Television interview that the U.S. “is on the verge of an explosion of greatness.”
Equity futures slumped earlier as JPMorgan Chase & Co. reduced its second-quarter growth forecast for the Chinese economy to 7.8 percent from 8 percent and the full-year estimate to 7.6 percent from 7.8 percent. It cited weak domestic demand suggested by April data, after reports yesterday showed China’s fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates.
Money managers are the most bearish on commodities in more than four years as a majority expected a weaker Chinese economy for the first time in 14 months, a Bank of America survey showed. A net 29 percent of the fund managers surveyed were underweight the asset class in May as their positions “collapsed” to the lowest level since December 2008. One in four now consider a “hard landing” in China as the biggest risk to their investments. The bank surveyed professional investors who together oversee $517 billion.

‘Marked Uptick’
“There has been a marked uptick” in concern about China, said John Bilton, an investment strategist at Bank of America’s Merrill Lynch unit, at a press conference in London today. “A hard landing is not our core scenario, but certainly investors are right to start thinking they should at least hedge some of that tail risk.”
The U.S. bull market has entered its fifth year. The S&P 500 has surged 143 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.
Federal Reserve Bank of Philadelphia President Charles Plosser reiterated that the central bank should reduce bond purchases. Plosser said that a slowing in U.S. inflation doesn’t warrant a policy response and that the Fed should begin to curtail its purchases as early as its next meeting, scheduled for June 18-19. He won’t vote on the Federal Open Market Committee until 2014.

‘Scaling Back’
“Labor market conditions warrant scaling back the pace of purchases as soon as our next meeting,” Plosser said in a speech in Stockholm today. “Moreover, unless we see a significant reversal in current trends that jeopardizes my forecast of near 7 percent unemployment rate by the end of this year, then I anticipate that we could end the program before year-end.”
Financial shares climbed 1.3 percent as a group. Bank of America added 2.2 percent to $13.27 for the biggest increase in the Dow. Citigroup climbed 2 percent to $49.90.
Tepper said his firm still owns stock of Citigroup and other U.S. banks. “We have a certain amount of the U.S. banks, which are a good sector,” he told CNBC.

Take-Two
Take-Two jumped 4.7 percent to $17.17. Profit excluding some items was 38 cents a share in the fourth quarter, topping the 23-cent average estimate compiled by Bloomberg, as digital sales almost tripled.
Fusion-io Inc. (FIO) climbed 3.6 percent to $15.03 as UBS AG raised its rating on the maker of data storage to buy from neutral. The stock’s drop after the company’s co-founder and chief executive officer resigned last week was overdone, according to UBS analysts led by Steven Milunovich.
SolarCity Corp. slid 5.2 percent to $34.01. The second-largest U.S. solar company by market value posted a first-quarter loss as it bore higher costs from installing rooftop solar systems at little or no charge to customers.
First Solar Inc. (FSLR), the largest U.S. solar manufacturer by shipments, declined 3.1 percent to $48.90 for the largest drop in the S&P 500.
To contact the reporters on this story: Lu Wang in New York at [You must be registered and logged in to see this link.]; Nikolaj Gammeltoft in New York at [You must be registered and logged in to see this link.]
To contact the editor responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

Some important notes: Watch your valuations

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Rally Matches 1990s Gains With Valuations 28% Lower

Returns from the U.S. equity bull market that started four years ago are matching those from the last half of the 1990s even as valuations are 28 percent lower.

The Standard & Poor’s 500 Index has gained 26.2 percent annually including dividends since March 2009, the same as during the last 50 months of the technology bubble, according to data compiled by Bloomberg. Shares in the index now trade at 18.6 times annual profit, below the average 25.7 multiple in the 1990s rally led by Internet companies.

For bulls, the valuations show stocks will keep rising after the S&P 500 advanced 164 percent as individuals scarred by the worst financial meltdown since the Great Depression return to equities. Bears say the price-earnings ratios mean investors lack confidence in the economy and corporate profit growth. They also note that the last time returns were this high, the bubble popped and more than $5 trillion was erased from the value of U.S. stocks, according to data from the World Bank.

“The size of this rally’s not what keeps me up at night,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees about $170 billion, said in a May 8 phone interview. “That was a tremendous rally then, too, but I’m not getting all nervous based on the size of the rally this time, because we’re not there yet in terms of valuation.”

2013 Rally

U.S. shares rose last week, with the S&P 500 increasing 1.2 percent to 1,633.70, pushing its rally for 2013 to 15 percent. Regeneron Pharmaceuticals Inc., which has the index’s biggest gain since March 2009, advanced 2.8 percent, while hotelier Wyndham Worldwide Corp. climbed 3.4 percent to bring its return to 1,986 percent. The index rose less than 1 point to 1,633.77 today.

Price gains in this bull market have failed to push valuations above historical averages because unlike in the 1990s, they were accompanied by earnings growth that was almost as great. Profits at American companies have surged 20 percent a year since 2009, twice as fast as during the dot-com advance. Companies in the S&P 500 earned $784.5 billion in the last 12 months, compared with $431.3 billion in 2000 and $255.7 billion in 1996, data compiled by S&P show.

“Valuation and sentiment are much more reasonable,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, said in a May 9 phone interview. His firm had $48.1 billion at the end of the first quarter. “The mentality then was this was a new paradigm, it’s not like it was before, you don’t pay attention to the traditional fundamentals. Today, I would describe the conditions as more positive for investing.”

Fed Stimulus

Concern the U.S. was at risk of another contraction prompted the Federal Reserve to take unprecedented action to spur growth during the last four years, pushing down interest rates and increasing the attraction of equities. The central bank pumped $2.3 trillion of stimulus into the economy and has held the benchmark lending rate near zero percent.
That’s different than what happened in 1999 and 2000, when the Fed raised its target rate for overnight loans between banks six times to 6.5 percent. Even with the policy, gains in gross domestic product have averaged 2 percent since 2009, less than half the rate as the 50 months through March 2000.
While the advance since 2009 that added $11.3 trillion to the value of stocks is comparable to the last four years of the technology bubble, it remains weaker than returns generated in that rally’s strongest stretch. The S&P 500’s level almost tripled during the 50 months starting in December 1994. Reaching gains of a similar size would have required the index to climb to about 1,918, or 17 percent above last week’s close.

Equal Weights

One version of the S&P 500 is posting returns that big. The so-called equal weighted index that strips out biases related to company value has surged 208 percent, or 31 percent annually, since March 2009, data compiled by Bloomberg show. It rose about half as much as the weighted S&P 500 during the 1996 to 2000 period.
Breadth has characterized the advance since 2009. About 89 (SPX) percent of stocks in the benchmark index are trading above their average price from the past 50 days, compared with 65 percent on March 24, 2000, when the Internet bubble burst, data compiled by Bloomberg show. Only 27 stocks made a new 52-week high at the peak of the market in 2000, compared with 74 (SPX) last week.

Encouraging Skepticism

“The bull market in 1999 and into early 2000 was increasingly narrow in terms of the number of companies driving the performance of the market,” Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC in Philadelphia, which manages $55 billion, said in a May 8 phone interview. “You have not yet seen the level of euphoria you saw in 1999, when it was driving equity prices north of 30 times earnings,” he said. “That level of skepticism is encouraging from a contrarian standpoint.”
While valuations are 28 percent below the 1990s rally, low earnings multiples are also a sign that investors don’t trust the economy will grow fast enough to support analyst estimates of future profits. S&P 500 earnings rose 1.8 percent in the quarter ending March 31, more than 11,000 analyst estimates show. That compares with an average of 4.7 percent last year and 25 percent in 2010 and 2011, according to Bloomberg data.
“Even though the market’s up, there’s still a great deal of concern from investors,” Matt McCormick, who helps oversee $9.1 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc., said in a May 9 phone interview. “It’s a situation where people really need to be selective.”

Defensive Rally

The breadth of this rally is also a consequence of investors favoring industries where earnings are less likely to plummet should the economy weaken. Health-care and household product companies posted the biggest gains in the S&P 500 last quarter, at 15 percent and 14 percent. So-called defensive shares have an average dividend yield of 2.4 percent, compared with 1.7 percent for cyclical stocks, data compiled by Bloomberg show.
Advances in companies that fund managers buy when they are expecting gains to slow have resulted in a smaller spread between the market’s leaders and laggards compared with the dot-com era. During the 1990s, computer makers and software designers surged 587 percent, more than four times as much as any other industry in the S&P 500 and at least 31 times more than utilities and household-product makers. Since March 2009, consumer discretionary shares have jumped 258 percent, or about three times as much as the worst-performing industries.

Yahoo, Dell

Yahoo! Inc. (YHOO), the search engine operator, posted the biggest gain in the last 50 months of the 1990s rally, surging 180-fold, while personal-computer maker Dell Inc. rose about 7,000 percent. The biggest gains since March 2009 are Regeneron in Tarrytown, New York, at 2,106 percent, Parsippany, New Jersey-based Wyndham at 1,986 percent, and television network CBS Corp., up 1,445 percent.
Eighteen stocks increased by more than 1,000 percent during the last 50 months of the 1990s rally, twice as many as now. With fewer companies posting returns of that size, individual investors have yet to return to stocks, according to Nick Sargen, who oversees almost $45 billion as chief investment officer at Fort Washington Investment Advisors in Cincinnati.
“The retail investors are more momentum-based, so they don’t go buy names because they’re cheap, they say look, that stock’s on a tear, I want some of that,” Sargen said in a May 8 phone interview. “That’s what was happening in the 1990s. It was a momentum driven market, and the thing was it was a good call for five years, so you did OK, until you didn’t,” he said.
“This just hasn’t been a momentum-driven market today,” Sargen said. “Retail investors have just missed the rally and they’re only now starting to become converts.”

Bond Comparisons

Mutual funds owning bonds have received more than four times as much money as those owning U.S. stocks in 2013, data from Washington-based Investment Company Institute show. Investors withdrew almost $400 billion from American equity funds over the last four years and added more than $1 trillion to bonds.
Treasuries have underperformed stocks during the bull market, losing 0.1 percent this year, compared with the S&P 500’s 15 percent, data from Bank of America Merrill Lynch and Bloomberg show. While bonds beat stocks in 2011, equities outperformed in 2010 and 2012, giving stock investors a total return about nine times as big as bondholders since March 2009.

Bull Market

In its broadest definition, the 1990s technology rally represented the conclusion of a bull market that began a decade earlier, in 1987, which produced a total return in the S&P 500 of 843 percent and annual gains of 20 percent, data compiled by Bloomberg show. While the rally since 2009 has lasted only about 30 percent as long, it’s approaching the average of five years for advances that lasted more than four months since World War II.
“That momentum just went on and on and on in ’96, ’97, ’98 and ’99, and it just got completely out of hand,” Brian Barish, president of Denver-based Cambiar Investors LLC, which manages about $8 billion, said in a May 9 phone interview. “We’re still finding lots of stocks today that are very compressed for what they are,” he said. “There’s a pretty good story out there this time.”

U.S. Stocks Advance on Leading Indicators, Sentiment Data
By Nikolaj Gammeltoft & Namitha Jagadeesh - May 18, 2013 1:15 AM GMT+0800

U.S. stocks advanced, putting the Standard & Poor’s 500 Index on track for its fourth straight week of gains, as gauges for leading indicators and consumer sentiment advanced more than estimated.
Northrop Grumman Corp. climbed 3.5 percent after increasing its share-buyback program by $4 billion. Boeing Co. and JPMorgan Chase & Co. added more than 1.9 percent to pace gains in the Dow Jones Industrial Average. (INDU) J.C. Penney Co. slid 2.5 percent after its first-quarter loss widened.

The S&P 500 (SPX) rose 0.5 percent to 1,658.15 at 1:11 p.m. in New York. The equity benchmark is heading for a 1.5 percent weekly gain. The Dow advanced 52.95 points, or 0.4 percent, to 15,286.17.
“You’ve got the leading indicators helping the market today,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $16 billion, said in a phone interview. “We’re seeing good signs for the economy, you’re getting this grinding, slow growth that just keeps coming out.”
The index of U.S. leading indicators climbed in April, a rebound from March that suggests the world’s largest economy may be poised for further expansion. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.6 percent last month after falling a revised 0.2 percent in March that was steeper than previously reported, the New York-based group said today

Consumer Sentiment
Consumer confidence rose in May to the highest level in almost six years as an advancing stock market and cheaper gas prices helped lift Americans’ outlook on the economy. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7 in May from 76.4 the prior month, a report today showed.
The U.S. bull market has entered its fifth year. The S&P 500 has surged 145 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.
The rally pushed 193 stocks in the S&P 500, or 39 percent of the gauge, to their highest levels in at least 52 weeks on May 15, the most in Bloomberg data going back to 1993.
About 90 percent of stocks in the benchmark index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg, approaching the two-year high of 93 percent reached January.
Options contracts on stocks, exchange-traded funds and indexes expire today, leading investors to adjust their holdings of some securities. Trading of S&P 500 stocks was in line with than the 30-day average at this time of day.

Banks, Industrials
Financial and industrial companies increased at least 0.9 percent for the biggest gains among 10 groups in the S&P 500 today. JPMorgan Chase added 1.9 percent to $51.92, the highest level since June 2007.
Boeing, the world’s largest plane maker, rose 2.3 percent to $98.76, the most in more than five years. United Technologies Corp., maker of Pratt & Whitney jet engines and Otis elevators, advanced 1.6 percent to a record $96.70.
Northrop Grumman climbed 3.5 percent to $81.78, an all-time high. The weapons maker said it will add $4 billion to an existing $1 billion share-repurchase program and retire 25 percent of its shares outstanding by 2015.
Automaker shares jumped 2.5 percent as a group, the most among 24 industries in the S&P 500. Goodyear Tire & Rubber Co. surged 6.6 percent to $14.69 and Ford Motor Co. added 2.9 percent to $15.06. European Union car sales rose in April for the first time since September 2011, the Brussels-based European Automobile Manufacturers’ Association said today.

Penney, Nordstrom
J.C. Penney dropped 2.5 percent to $18.32 after its first-quarter loss widened as the department-store chain works to rebound from former Chief Executive Officer Ron Johnson’s failed makeover. CEO Myron Ullman, who took the position back from Johnson last month, has been increasing promotions to revive sales while pursuing a $1.75 billion loan.
Nordstrom Inc. retreated 1 percent to $60.52 after the retailer posted first-quarter revenue that trailed analysts’ estimates and cut its sales forecast for the year.
Brocade Communications Inc. slumped 4.2 percent to $5.50 after the maker of network equipment said it expects third-quarter adjusted earnings of 11 cents to 13 cents a share, trailing the average forecast of 15 cents by analysts in a Bloomberg survey.
Autodesk Inc. tumbled 7.5 percent to $36.82 for the biggest decline in the S&P 500. The maker of engineering-design software said it sees full-year revenue growth of 3 percent, lower than its February forecast of 6 percent.
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To contact the editor responsible for this story: Lynn Thomasson at [You must be registered and logged in to see this link.]

Ben speaks today....market is watching the Fed....when will they start releasing their foot from the pedal