Stocks End Higher, Dow Snaps Losing Streak

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Includes: DIA, QQQ, SPY
by: Midnight Trader

4:29 PM, May 18, 2011 --

  • NYSE up 69.71 (+0.8%) to 8,402.78
  • DJIA up 80.60 (+0.7%) to 12,560.18
  • S&P 500 up 11.70 (+0.9%) to 1,340.68
  • Nasdaq up 31.79 (+1.1%) to 2,815.00

GLOBAL SENTIMENT

  • Nikkei up 1%
  • Hang Seng up 0.5%
  • Shanghai Composite up 0.7%
  • FTSE-100 up 0.6%

UPSIDE MOVERS

(+) DELL extends evening gain that followed earnings beat.

(+) SODA beats with Q1 results and raises outlook.

(+) CKXE gains as Apollo launches $5.50 per share cash tender offer.

(+/-) OXGN says two studies to be presented at ASCO.

(+) ANF beats Q1 estimates.

(+) BJ beats Q1 EPS, sales just shy, issues mixed guidance.

(+) NLCI sold in $149 mln deal.

(+) VVUS reports positive study results.

DOWNSIDE MOVERS

(-) TGT beats with Q1 EPS, sales miss.

(-) SPLS misses with earnings, cuts outlook.

(-) DE gives up early gain; reports Q2 profits, sales beat.

(-) CLDX continues evening drop that followed announced offering.

(-) FRO ends contract.

(-) ING down despite upgrade.

MARKET DIRECTION

Stock averages end higher, including an over 1% gain for the Nasdaq. Stocks got off to a choppy start as Wall Street digested mixed earnings, including upbeat news out of Dell (DELL) and a worrisome report from Staples (NASDAQ:SPLS).

A modest broad-market recovery gained more steam after the release of Federal Reserve meeting minutes this afternoon. The minutes reveal mixed feelings among the members in regards to the timing of the first interest-rate tightening.

Energy and materials stocks gained amid improved commodities prices. Commercial crude oil inventories remained at 370.3 million barrels, above the upper limit of the average range for this time of year, the EIA said. Analysts polled by Platts were looking for crude stocks to gain by 500,000 barrels.

The EIA reported a slight 100,000 barrel gain in gasoline, putting inventories at the lower limit of the average range. Analysts were looking for a 550,000-barrel gain. Distillates decreased 1.2 million barrels; analysts had expected an increase of 600,000 barrels.

Commodity futures finished higher with both gold and crude oil futures logging gains to close the session. The dollar also gained strength against foreign currencies. Light, sweet crude for June delivery finished up 3.3% at $100.10 a barrel. In other energy futures, heating oil was up 2.15% to $2.90 a gallon while natural gas was up 0.41% to at $4.19 per million British thermal units.

Meanwhile, gold finished higher on renewed fears of inflation. Gold for June delivery traded up 1.1% to $1,495.80 an ounce. In other metal futures, silver was up 4.33% to $34.94 a troy ounce while copper traded up 2.68% to $4.10.

The U.S. dollar index (DXY) was up 0.09% to $75.47.

The Fed's FOMC panel was unanimous in its decision to complete its $600 billion bond-buying program in June as planned and to hold rates steady for now. Some Fed officials told their colleagues that they would only support a third round of asset purchases, known as QE3, if the economic outlook changed significantly, MarketWatch and other news outlets report.

The minutes revealed that Fed officials spent a lot of time discussing how to exit from an ultra-low stance, with rates stuck between 0% and 0.25%, and what to do about the $2.7 trillion in assets the central bank has amassed on the books. Fed officials stressed that the discussion was not a sign that an exit would necessarily begin soon.

While no decisions were made, most of the FOMC members said they wanted to shrink the balance sheet through predictable asset sales. Most members preferred the asset sales to come after the first increase in the FOMC's target for short-term interest rates.

In company news:

Shares of Shire plc (SHPGY) were higher after it said it agreed to acquire life sciences company Advanced BioHealing for $750 million a day before the company was to go public. The deal is seen closing in late Q2 or early Q3.

Research in Motion (RIMM) shares were up after the company was reportedly upgraded to Market Perform from Underperform at Bernstein. The firm cited valuation for the upgrade, and set price target for shares at $40.

VIVUS (NASDAQ:VVUS) firmed after it said late Tuesday positive results from a pivotal phase 3 open-label clinical trial evaluating long-term safety and efficacy of the investigational drug avanafil for the treatment of erectile dysfunction (NYSE:ED) were presented at the 2011 Annual Meeting of the American Urological Association.

The study met all primary endpoints, the company said. Separately, Bloomberg reports that VVUS' effort to win regulatory approval for weight-loss pill Qnexa may be helped by a study showing little risk of birth defects in children of women who took one of the medicine's ingredients.

Shares of Morgan Stanley (NYSE:MS) were higher as Bloomberg reports the bank has no plans to renegotiate the terms of its joint venture with Citigroups (NYSE:C) Smith Barney, citing Morgan Stanley Chief James Gorman. The comment came at the company's annual meeting in response to a question about the uses of capital following the firm's agreement to convert Mitsubishi UFJ Group's preferred shares, the report said.

Chevron (NYSE:CVX) shares were higher as Bloomberg reports the oil major is not seeking partners for its shale-gas fields in Poland. Furthermore, the company isn't seeking additional reserves in Poland, the report said. Chevron reportedly owns four shale gas exploration licenses in Poland's Lublin basin, where it will begin drilling exploratory wells in Q4 of this year.

In earnings news:

- Dell (DELL) was up after the computer maker reported record Q1 non-GAAP EPS of $0.55 vs. $0.30 a year earlier and topping the Thomson Reuters mean analyst estimate for $0.44. Revenue in the quarter increased 1% to $15 billion, with enterprise solutions and services accounting for 30% of the total. The Street looked for $15.4 billion.

Dell expects mid-single digit revenue growth in its Q2, which is slightly above its normal, sequential seasonal growth of 2%-3%. Dell's updated outlook for fiscal 2012 includes revenue growth of 5%-9% and an increase in non-GAAP operating income growth to 12%-18%.

- Staples Inc. (SPLS) plummeted as it reported Q1 EPS of $0.28 compared to $0.26 a year earlier but shy of the Street view for $0.32. Revenue rose 1.9% to $6.17 billion, about in line with the Street view. For 2011, the company now expects earnings between $1.35 to $1.45 a share, down from its previous forecast of $1.50 to $1.60 a share. The Street is at $1.53.

- Aflac (NYSE:AFL) was down after it set an EPS growth target of 0% to 5% for next year at an analyst briefing late Tuesday, according to analysts, Marketwatch.com reports. Wells Fargo reportedly said the 2012 EPS guidance was below its expectations.