Good morning.
Stocks are moving higher in the early going, bouncing back from Friday’s selloff that left the main indexes down for the week.
S&P 500 +0.4%
Dow +0.6% or 105 points
Nasdaq +0.4%
Pfizer was last up nearly 3% for the best performance among Dow stocks.
The U.S. drug giant confirmed Monday that it made a renewed approach to AstraZeneca regarding a takeover valued at nearly $100 billion, but the U.K.-listed pharmaceutical firm had declined to engage in talks.
Pfizer also was briefly the S&P 500′s top performer, but it’s now been beat out by Roper Industries.
Photo credit: Bloomberg
Roper Industries was last up 7% to leading the S&P 500.
Our Dow Jones colleagues who write the Market Talk column for DJ Newswires have a nice take on Roper’s action.
Here’s an excerpt from their piece (which is titled “Roper Stops the Rope-a-Dope):
“After beating its typically conservative forecast in its latest quarter, it’s no surprise data-reader equipment maker Roper (ROP) boosts earnings guidance for the year. But it is notable the company’s 2Q forecast is at minimum in line with consensus. Either ROP is getting bullish or Wall Street thought it had gotten wise to the company’s tactics and lowballed expectations themselves. Regardless, the company continues to log double-digit profit growth–which is good regardless of how the estimates game in progressing.”
While the S&P 500 and Dow continue to hold in positive territory, the Nasdaq has turned negative in the last few minutes.
S&P 500 +0.2%
Dow +0.4% or 71 points (after being up triple digits earlier this morning)
Nasdaq -0.1%
And now the Nasdaq has climbed back into positive territory over the last few minutes.
All three main indexes are showing decent gains, trading not far off the 30-minute-old session’s highs.
S&P 500 +0.4%
Dow +0.6% or 94 points
Nasdaq +0.4%
Photo credit: Bloomberg
Stocks added to their gains slightly after a report on pending home sales that hit at 10 a.m. Eastern, but they’re now pulling back somewhat. Still showing decent gains though.
A gauge of pending home sales rose 3.4% in March – the first gain in nine months – signaling that sales of existing homes may pick up, says MarketWatch’s short story by Ruth Mantell.
Today’s data on pending home sales is far from the most important economic report that we’ll get this week.
Friday, after all, bring the jobs report.
“A data-packed week starts out slow on Monday with what is usually a minor report on pending home sales,” says MarketWatch’s Jeff Bartash in his preview of this week’s economic reports.
The preview is replete with ocean metaphors:
“The tide in the economy went out during a brutal winter, but it’s coming back in fast this spring. A flood of reports this week, led by job creation in April, is likely to show that U.S. growth is cresting higher.”
Read more here.
Credit for that Pacific Ocean photo: Reuters
U.S. stocks are recovering as a busy week for corporate earnings and economic data gets underway, says Colin Cieszynski of CMC Markets in a note this morning.
“The situation in Ukraine didn’t spiral out of control over the weekend so today finds traders who had stepped out on Friday stepping back in today,” he writes.
“Today has been an active one for developments in mergers and acquisitions with another big round of earnings on the way. This week, however, focus turns from technology and industrials to mining and energy.”
Read more about this week’s notable earnings reports in Wally Witkowski’s preview story (which features the adjacent chart): Energy, utilities companies face earnings test
While that CMC Markets note points out the Ukraine situation didn’t spiral out of control, there are still plenty of troubling headlines out of that conflict.
The mayor of Ukraine’s second largest city (Kharkiv) — which has largely managed to fend off the unrest that has engulfed other parts of the east — was shot by gunmen Monday and is clinging to life.
The White House on Monday announced a series of additional sanctions on Russia for its actions in Ukraine.
Mohamed El-Erian, formerly with Pimco, warned on Monday in an interview with CNBC that “if sanctions go from targeting individuals … to targeting sectors, you could tip Europe into recession, and the stock market’s not going to like that.”
ICYMI from Sunday: Pro-Russia rebels in eastern Ukraine raised the stakes in their conflict with Kiev by parading Western military observers as hostages.
Credit for the photo of the hostages: Reuters
More than an hour into today’s session, the market mostly seems to be taking its cue from today’s M&A news rather than Ukraine worries.
Beyond Pfizer trying to woo AstraZeneca with an offer worth nearly $100 billion, Forest Labs is paying $1.1 billion for Furiex Pharma.
Read more about the M&A deals and other movers in our Movers & Shakers column.
One takeaway for investors: The M&A activity indicates some optimism in corporate boardrooms.
The WSJ’s story about Pfizer’s moves throws out a big M&A number — $1 trillion in deals so far:
“Last week, announced deal volume world-wide crossed $1 trillion for this year. That made this the fourth-quickest year to cross the trillion-dollar mark and the fastest since 2007, according to data provider Dealogic.”
With stocks trading higher Monday, all is at peace with this fraught bull market — for now. But what’s in store for the years ahead? Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, says the five-year-old bull market has a happy, healthy future ahead.
That’s because the only reason bull markets reverse course with regularity is due to the onset of a recession. And right now, the sluggish pace of economic growth means a recession is far off. He’s not the only one to point out the intuitive connection between a drop-off in economic growth and a slide in stocks. But given how far the market has come since it bottomed out in 2009, a call for more years of gains seems, well, bold. Take a look at past market turning points above, and read the full blog here.
Jim Russell, senior equity strategist at U.S. Bank Wealth Management, says deal news is certainly helping markets.
“Enhanced M&A activity – with large-scale deals such as Pfizer’s – is stemming from enhanced business confidence globally. Business leaders feel that global economic growth is sustainable for such decisions.”
The last time The Dow Jones Industrial Average finished April with losses was in 2005, when the index lost nearly 3%.
The next 3 trading sessions, including today’s, will determine if the blue-chip index will continue or break this “up Aprils” trend.
As of now, the Dow is down 0.6% for the month.
Wall Street kicks off on a mixed note, plus shares of AstraZeneca are soaring on word it’s being wooed by Pfizer. MarketWatch’s Ann Cates reports.
It appears the early rally on Wall Street is fizzling out. The Nasdaq Composite turned negative and was down about 5 points at last check.
The Dow is up 77 points after being up nearly 130 points in mid morning. The S&P 500 is trading 4 points higher.
What’s dragging Nasdaq down today? It looks like it’s the Internet stocks, though biotechs are slightly down as well.
Baidu, Inc ADRs – are at the top of the losers – down 6%.
Netflix -4.5%
Amazon -4.2%
Facebook -3.4%
Priceline -2.8%
But Apple is up 3% and Microsoft is up 2.6%.
Merger Monday seems to be living up to its name, and it appears that deals are what’s moving the health-care market as the week begins, writes Russ Britt.
The big name, of course, is Pfizer Inc. announcing that, yes, it would like to purchase AstraZeneca, and has made two overtures, one in January and another last Friday, that AstraZeneca has resisted.
CBS.com
Publicity still from CBS sitcom “The Big Bang Theory”
The Chinese government has apparently decided to ban the viewing of several American TV shows, including “NCIS” and “The Big Bang” on popular streaming sites such as Youku.com and Sohu.com. It was not clear why the censors took the steps to take down those shows but the move comes on the heels of stricter censorship of foreign and domestic entertainment content.
U.S.-listed shares of Sohu.com Inc. /quotes/zigman/83411/delayed /quotes/nls/sohu SOHU slumped 8.7% in the wake of worse-than-expected quarterly losses while U.S. shares of Youku Tudou Inc. /quotes/zigman/2786183/delayed /quotes/nls/yoku YOKU skidded 8.7%.
Weibo Corp. /quotes/zigman/32065522/delayed /quotes/nls/wb WB , aka China’s Twitter, slumped 9.5% in the U.S. market.
Bloomberg
Twitter Inc. /quotes/zigman/23556538/delayed /quotes/nls/twtr TWTR , which is slated to report quarterly results after Tuesday’s closing bell, has tweeted that it will take earnings-related questions via, what else, Twitter.
Shares of Twitter are down 3.8% as of mid-day Monday with analysts projecting the microblogging company to report a loss of 3 cents a share.
So what would you ask? Tweet your questions to @SueChangMW
Bloomberg
Shares of Herbalife Ltd. /quotes/zigman/361145/delayed /quotes/nls/hlf HLF are up 1.3% ahead of the release of its quarterly results late Monday.
Analysts surveyed by FactSet are projecting the company to earn $1.30 a share in the first quarter. The earnings report comes as the company is under probe by various regulators amid charges from hedge fund manager Bill Ackman that is is a pyramid scheme.
Markets have turned decidedly negative. Financials and the consumer discretionary sector stocks are leading losses on the S&P 500.
S&P /quotes/zigman/3870025/realtime SPX -10 points
Dow /quotes/zigman/627449/realtime DJIA -11 points
Nasdaq /quotes/zigman/12633936/realtime COMP -55 points
Stocks began the session with a solid advance. But the gains failed to stick. Peter Boockvar, managing director at The Lindsey Group, says investors are awaiting Friday’s April employment report. Wednesday’s Fed meeting is more widely anticipated, he says.
Volatility index as measured by the CBOE Vix is up 7.3% to 15. Otherwise known as Wall Street’s fear gauge does not have predictive powers, but shows how much people are afraid at the moment.
The index has been trending slowly higher in the past two years.
Bank of America Corp. announced an adjustment to its regulatory capital numbers Monday and as a result the Fed has forced the bank to suspend its dividend increase and share repurchase plan, writes Sital S. Patel.
You can read more about the bank’s blunder and the rhetoric against the big banks in the Tell Post.
Shares in Bank of America Corp fell 6.4%.
Treasurys are one market benefiting from the selloff in stocks Monday. Treasury prices had fallen in morning trade, accelerating the drop after strong pending home sales data. As prices fall, yields rise.
But as equities sold off throughout the day, investors flowed back toward the safety of U.S. government debt, cutting losses. The 10-year note /quotes/zigman/4868283/delayed 10_YEAR yield was last up 1.5 basis points on the day at 2.68%, after climbing as high as 2.71%.
“It’s more of a stocks story that’s leading into a bid into the bond market after the data-related selloff this morning,” said Michael Pond, head of global inflation-linked research at Barclays.
Bloomberg
Pfizer /quotes/zigman/238207/delayed /quotes/nls/pfe PFE , which is in the news because it would like to buy AstraZeneca (see earlier post), is among the 134 S&P 500 /quotes/zigman/3870025/realtime SPX companies slated to report earnings this week. Click here for a nifty map of those S&P 500 companies with earnings expectations.
The Dow Jones Industrial Average just turned green again and is up 10 points. The index went from triple-digit gains in the morning to losses in the afternoon and now back in green. Barely.
It’s quite common to hear comparisons between the current state of bitcoin and the early days of the Internet, namely in the early-to-mid 1990s when Yahoo Inc. and eBay Inc. were taking baby steps. But venture-capital funding in bitcoin startups has lagged funding of early Internet companies so far. In 1995, the first year of data available according to the MoneyTree report, first-sequence funding in Internet-specific companies was $250.2 million. In 2013, venture-capital funding for bitcoin companies came in at $74.1 million.
Of course, there’s evidence that funding is picking up. Bitcoin funding in the first-quarter rose to $64.9 million, nearly 90% of the money raised last year.
“A technology like bitcoin today is going to grow in scale and have its network effect come together much differently, much more quickly, than any other technologies we’ve seen,” said Matthew Roszak, co-founder of the venture-capital firm SilkRoad Equity. Read more: Bitcoin is like the early Internet, minus the venture capital
The Dow remains in the green, at 0.2% or 16,393.86. S&P 500 just turned green at 0.1% or 1,863.53. Nasdaq is still in the red at 0.5% ot 4,055.49.
Lululemon Athletica Inc.’s /quotes/zigman/39660/delayed /quotes/nls/lulu LULU shares, down 2.3% at $44.44, have fallen for seven-straight trading sessions, losing 14% of their value through Monday, reports MarketWatch’s Andria Cheng. During a meeting in mid-April, the yoga-inspired athletic clothing retailer promised investors it would restart growth and be an “originator brand” that will continue to lead the market. But investors were disappointed that Lululemon didn’t lay out the details.
“The company is reaching a maturing point,” said Credit Suisse analyst Christian Buss in an interview on Monday. “The analyst day was an opportunity for Lululemon to give perspective on how the company is going to stabilize the business, but they didn’t address those challenges.”
Read more here.
It’s been a roller coaster of a day for S&P 500, as one analyst points out on Twitter:
Photo Credit: William T Mogey
The Dow average swung pretty wildly today – it traded in a range of 187 points and looks set to finish the day higher. It went from a triple digit rise to a modest loss and it now back up 104 points. Pfizer and Microsoft are leading gains.
Are companies getting tired of the quarterly game in which they lower earnings expectations in an effort to make it easier to top forecasts when results come in?
Analysts at Goldman Sachs see some such signs, noting that guidance this quarter has been less negative than in recent quarters, with commentary noting a pickup in business activity in March and early April.
That would be a good thing. One thing many strategists seem to agree on is that markets will need to see companies deliver on earnings growth to keep the bull market alive, particularly as the Fed continues to slow the flow of liquidity to the market.
It was an ugly day yet again for Internet stocks, particularly social media, while biotech avoided some of the worst of the drubbing, notes MarketWatch’s Vic Reklaitis.
The Global X Social Media ETF fell 2.7%, the iShares Nasdaq Biotech ETF fell 0.3% and the First Trust Dow Jones Internet ETF lost 1.9%. Read more here.
Big swings for the S&P 500 and the Dow Jones Industrial Average saw both indexes end in positive territory. The Nasdaq Composite lagged behind, ending just barely in negative territory.
Here are the numbers:
S&P 500 — up 6.03 points, or 0.3%, to 1,869.43
DJIA — up 87.28, or 0.5%, to 16,448.74
Nasdaq — down 1.16 points, or less than 0.1%, to 4,074.40