Markets Up, and other Closing News

The Dow stopped its two-day skid today, closing just 11 points off the session high to end the day 80 points in the green.  Markets were higher today on the back of corporate earnings and a commodities comeback that pushed energy and materials companies higher.

  • Dell reported earnings after the close yesterday that set the tone for today’s rally.  Q1 earnings per share for the tech giant came in at $0.55, well ahead of the expected $0.44 per share.  Quarterly earnings from BJ’s Wholesale and Analog Devices also helped to push markets higher.
  • Oil traded back over $100 a barrel, stopping a two-day slide, after U.S. Crude Inventories came in 15,000 barrels lower than last week.  The drop triggered a climb in oil because analysts were expecting a 1 million barrel bump in inventories.  Commodities were strong across the board as natural gas (+0.33%), gold (+1.07%), and silver (+1.48%) all traded higher for the day.
  • The Federal Open Market Committee (FOMC) released the minutes from their April 26-27 meeting this afternoon, and the minutes revealed that Fed officials had extensive discussions on the “exit strategy” for the Fed’s balance sheet.  While it was agreed that the balance sheet, currently around $2.7 trillion, needed to shrink, the timing for the winding down will largely depend on the economy’s strength and ability to handle the run-down of $1.5 trillion in Treasury holdings.

Market Indices/Statistics:

  • Dow closed up 80.60 pts/+0.65% to 12,560.18
  • S&P closed up 11.70 pts/+0.88% to 1,340.68
  • Nasdaq closed up 31.79 pts/+1.14% to 2,815.00
  • 23 of the 30 Dow stocks closed up / 7 closed down
  • 9 of the 10 S&P 500 sectors closed up (only Utilities was lower)
  • Energy was the best performing sector (up 2.16%)
  • Utilities was the worst performing sector (down 0.34%)
  • The VIX is down 1.41 pts to 16.14
  • Oil is up $2.71 to $100.14
  • Nat Gas is up $0.013 to $4.259
  • Gold is up $15.50 to $1,495.50
  • Euro vs. Dollar up $0.0002 to $1.4238
  • Dollar vs. Yen up $0.31 to $81.68

Companies in the News:

Hershey shares traded lower (-2.80% to $55.48) after announcing that its COO, John P. Bilbrey, will become the interim President and CEO, following the announcement that former CEO, David West, will be leaving the company.  West, who had been with Hershey for ten years, will become the CEO of Del Monte Foods Company.

General Mills (+0.05% to $39.89) announced agreements to acquire a 51% controlling interest in Yoplait S.A.S. and a 50% interest in a related entity that holds the Yoplait yogurt brands.  The deal is valued at $1.15 billion.

White Mountains Insurance Group (+15.00% to $395.18) agreed to sell its Esurance and Answer Financial to All State (+0.09% to $32.45), in a deal valued at over $700 million.  After including the tangible book value of the entities, the total purchase price is expected to be $1 billion.  Allstate Chairman and CEO, Thomas Wilson, appeared on CNBC today saying the acquisition gives All State access into markets where they currently do not have a strong presence.

Energy companies traded higher today after the U.S. Crude Inventories came in better than expected and the Senate fell eight votes short of the votes needed to end oil and gas tax breaks.  Chevron (+2.44% to $102.86), Exxon Mobil Corp (+1.65% to $81.74), Cabot Oil and Gas (+3.29% to $55.25), and Frontier Oil Corp. (+6.23% to $28.64) all traded higher.

Earnings:

Target traded lower today (-1.61% to $49.96) after its earnings report left investors with doubts about margins moving forward, and comments by the CEO that the U.S. recovery is likely to be slow and uneven.  The concerns trumped their earnings which beat on both top (Q1 Revenue of $15.94 billion vs. $15.58 billion expected) and bottom lines (Earnings per share of $0.99 vs. $0.94 expected).

Deere Co. (-0.53% to $86.50) traded slightly lower after beating top line expectations, but earnings were hurt by raw materials costs.  DE reported Q2 sales of $8.91 billion vs. $8.14 billion expected, resulting in earnings per share of $1.58 vs. $2.06 expected.

Shares of BJ’s Wholesale (+1.75% to $52.19) were higher today after the wholesale club reported Q1 earnings.  Q1 earnings per share came in $0.06 above expectations at $0.62 on sales of $2.77 billion vs. $2.82 billion expected.  Shares were pushed higher as BJ’s increased their FY outlook by $0.06 to $2.68-2.88 vs. $2.80 expected by analysts.

Chicos FAS shares fell today (-5.13% to $14.43) after announcing its Q1 results before the bell.  The women’s retailer announced Q1 earnings per share of $0.26 vs. estimates of $0.25, but shares were under pressure because it missed analysts sales estimates ($537 million vs. $544 million expected) and concerns about inventories moving forward.

Analog Devices Inc. surged higher today (+2.37% to $42.60) after pulling off the hat trick, beating on top line (2Q Revenue $791 million vs. $742 million expected), bottom line ($0.78 earnings per share vs. $0.68 expected), and guidance (3Q EPS $0.70-0.75 vs. $0.69 expected).  Also driving ADI shares higher today was the board’s decision to raise the quarterly dividend from $0.22 per share to $0.25.

Coming Thursday:

Economic Reports: Initial Jobless Claims (expected to be 430K)

Earnings from Barnes & Noble, The Gap, The Toro Company, Tidewater, and Salesforce.com