Posted on April - 20 - 2011
Earnings Optimism May Be Tempered By Profit Taking
- The major U.S. index futures are pointing to a higher opening on Thursday, with earnings optimism likely to be tempered by profit taking that took the Dow Industrials to a multi-year high on Wednesday. An economic report released earlier in the day showed that jobless claims fell, although by much less than what economists had estimated. Sentiment may also hinge on the results of a regional manufacturing survey to be released shortly after the markets open.
U.S. stocks advanced strongly on Wednesday, with earnings providing the much-needed catalyst to propel the Dow to a multi-year high. The major averages opened higher and spiked sharply in early trading, as traders reacted to a spate of positive tech earnings. With existing home sales also rising, the markets stayed afloat and consolidated their gains for the rest of the session.
The Dow Industrials added 186.79 points or 1.52 percent before closing at 12,4564, its highest closing level since June 5th, 2008, and the S&P 500 Index ended up 17.74 points or 1.35 percent at 1,330. Meanwhile, the Nasdaq Composite Index outperformed with an advance of 57.54 points or 2.10 percent before ending at 2,803.
Twenty-four of the Dow components advanced in the session, with Intel (INTC) leading the advance with a nearly 8 percent rally. Exxon Mobil (XOM), United Technologies (UTX), Microsoft (MSFT), 3M Co. (MMM), McDonald’s (MCD), Johnson & Johnson (JNJ), Hewlett Packard (HPQ), Chevron (CVX), Caterpillar (CAT) and Boeing (BA) were among the other notable gainers.
Technology stocks saw significant strength, as reflected by the 4.27 percent advance by the Philadelphia Semiconductor Index, the 3.11 percent rally by the NYSE Arca Disk Drive Index, the 2.01 percent gain by the NYSE Arca Software Index, the 2.95 percent climb by the NYSE Arca Networking Index and the 2.50 percent surge by the NYSE Arca Internet Index.
Additionally, the NYSE Arca Oil Index ended up 2.45 percent, the Dow Jones U.S. Basic Materials Average climbed 1.51 percent, the NYSE Arca Securities Broker/Dealer Index gained 2.05 percent, the S&P Retail Index added 1.45 percent and the Philadelphia Housing Sector Index advanced 1.24 percent. Meanwhile, the Dow Jones Utility Average rose 1.27 percent and the NYSE Arca Biotechnology Index gained 1.84 percent.
On the economic front, the National Association of Realtors reported that existing home sales rose to a seasonally adjusted annual rate of 5.1 million units in March compared to 4.92 million units in February. Single-family sales growth was primarily responsible for the upside. Distressed home sales accounted for 40 percent of the total sales. Existing home sales inventories as measured by the months of supply fell to 8.4 months from 8.5 months in the previous month. Meanwhile, the median home price declined 5.9 percent year-over-year to $159,600 in March.
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