Dow up 52 as stocks kick off April with solid rally
A decent report on manufacturing offsets a weak report on construction spending. An analyst price target of $1,001 pushes Apple over $610. Coty bids $10 billion for Avon Products. Groupon slumps on accounting problems. Oil and gold move higher.
Stocks began April with a decent rally, finishing at multiyear highs, but the market ended well off its highs on the day after a new report suggesting that U.S. manufacturing is continuing to grow offset a decline in construction spending.
Technology stocks were generally higher, led by Apple (AAPL), which jumped nearly to $620. Energy shares moved up with oil prices.
But shares of Groupon (GRPN) were off sharply after the company said fourth-quarter sales weren't as strong as reported, and Amazon.com (AMZN) shares fell below $200 for the first time in a week on an analyst downgrade. Avon Products (AVP) shares jumped after rival Coty bid $10 billion for the cosmetics marketer. Avon rejected the bid.
The market came back from early lows as it starts the month and the second quarter. April is historically the best month of the year for the Dow Jones Industrial Average ($INDU). This is a big week of economic reports that includes data on March auto sales Tuesday and will peak Friday when the government reports on unemployment and payroll employment.
The Dow closed up 52 points to 13,264, its highest close since Dec. 31, 2007. The close represented a swing of more than 111 points since right after the open, when the blue chips were down as many as 58 points. The blue chips had been up as many as 85 points. The Standard & Poor's 500 Index ($INX) finished up 11 points to 1,419, its best finish since Jan. 9, 2008, and the Nasdaq Composite Index ($COMPX) added 28 points to 3,120 -- its best close since Nov. 15, 2000.
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The Nasdaq-100 Index ($NDX) was up 29 points to 2,784. Apple's gain of $19.08 to $618.63 contributed 16 points, or 55%, to the index's gain.
In a broad rally, there were gains in transportation, bank and energy stocks. There were only a few losing groups: semiconductor, biotech and housing stocks. Volume, however, was light. New York Stock Exchange volume was less than 763 million shares.
The Dow was up 8.1% in the first quarter, with the S&P 500 up 12%, their best first quarters since 1998. The Nasdaq's 18.7% gain was its best first-quarter performance since 1991.
The second quarter is often volatile with strength typically in April. May, however, is the start of the worst six months of the year. In April 2011, the Dow climbed nearly 4% and fell 3.1% in May and June and then kept on falling until the index was down 5.7% for the year.
In 2010, the Dow gained 9.35% total between the end of January and the end of April -- and fell 9.41% in May and June.
Coming Tuesday is the March report on auto and truck sales. Bloomberg News projects auto sales will hit an annualized 14.5 million units, up from 13.1 million units a year ago but off slightly from a 15.1-million-unit sales rate in February. Ford Motor (F), General Motors (GM), Honda Motor (HMC) and Nissan (NSANY) were higher today in New York.
The government will also report on factory orders for March, and the Federal Reserve will release the minutes of its March 13 meeting.
Futures trading suggests a flat open on Tuesday.
Why Apple jumped: Blame it on Brian White
There was a reason for Apple's big gain.
It was because of Topeka Capital's Brian White decides to one-up his many bullish peers by starting coverage with a $1,001 price target. (We're not making this up. He even went on television to explain himself.)
White, who made plenty of positive remarks about Apple while at Ticonderoga Securities, praises Apple's brand for being "able to touch the soul of consumers of all backgrounds." He also thinks China and a TV set could help out some.
He sees Apple selling 11.6 million iPads in the quarter that just ended. But the big growth will come in the fall with the iPhone 5. "We think there's a lot of upside."
A stock price of more than $1,000 isn't unheard of. Berkshire Hathaway's (BRK.A) A shares and meat-processor Seaboard (SEB) closed today at $122,693 and $1,949.50, respectively.
Apple's share are the sixth priciest common shares, after Berkshire Hathaway, Seaboard, travel discount site Priceline.com (PCLN), homebuilder NVR (NVR) and Google (GOOG).
Crude oil, gold rise; so do energy and metals stocks
Energy stocks were higher as crude oil (-CL) settled up $2.21 to $105.23 a barrel in New York. Brent crude was up $1.85 to $125.50. Natural gas (-NG) recovered from early losses, settling up 2.6 cents to $2.152 per million British thermal units.
The retail price of gasoline was $3.925 a gallon, according to AAA's Daily Fuel Gauge Report. The price hasn't changed in four days.
Exxon Mobil (XOM) was up 34 cents to $87.07. Chevron (CVX) added $1.09 to $108.30.
Gold (-GC) settled up $7.80 to $1,679.70 an ounce. Silver (-SI) added 61.4 cents to $33.10 an ounce. Copper (-HG) added 9.6 cents to $3.921 a pound. Metals stocks were higher, with Freeport-McMoRan Copper & Gold (FCX) up $1.07 to $39.11. U.S. Steel (X) rose 89 cents to $30.26.
Interest rates were lower, with the 10-year Treasury yield falling to 2.189% from Friday's 2.216%. The dollar was lower against major currencies.
|Energy prices -- New York close|
|Mon.||Fri.||Month chg.||YTD chg.|
|Crude oil (-CL)||$105.23||$103.02||2.15%||6.48%|
|Heating oil (-HO)||$3.2496||$3.1701||2.51%||11.51%|
|Natural gas (-NG)||$2.1520||$2.1260||1.22%||-28.00%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$3.3822||$3.3081||2.24%||27.27%|
|(per gallon; AAA)|
ISM manufacturing gains; construction spending is weak
The pace of growth in manufacturing picked up last month, but construction spending saw its largest drop in seven months in February, pointing to an economy that is healing gradually.
The Institute for Supply Management said its index of national factory activity rose to 53.4 from 52.4 in February, topping economists' expectations of 53.0.
It was a rebound for the sector that in February saw the pace of growth slow unexpectedly. Even so, the forward-looking gauge of new orders was modestly weaker in March, easing to 54.5 from 54.9. But, as Paul Dales of Capital Economics noted, this was more than offset by rises in the production (58.3 from 55.3) and employment (56.1 from 53.2) indices.
The index has been stuck in a tight range in the low 50s since last summer, pointing to steady but slow growth for the sector. Dales' comment: The economy "is ticking along nicely."
Compare that with Europe. The eurozone's manufacturing sector contracted for the eighth straight month in March, with the downturn spreading to core countries Germany and France.
Meanwhile, U.S. construction spending fell 1.1% to an annual rate of $808.86 billion, the lowest level since October as investment in private and government projects fell.
As well, spending in January was revised to show a much bigger 0.8% fall instead of the previously reported decline of just 0.1%. The declines suggest construction will continue to be a drag on the economy.
Coty's bid for AvonCoty Products offered to buy rival Avon Products (AVP) for $23.25 a share in cash, or about $10 billion. Coty said the proposal is a premium of 27% over the three-month volume-weighted average price for Avon.
Avon rejected Coty’s proposal, saying in a statement that the offer was "opportunistic" and not in its shareholders’ best interests. Avon shares were up $3.34 to $22.70. That suggests some investor skepticism that Avon will be able to find a better offer.
The company has seen earnings declines for three straight years. It has has been roiled by a continuing investigation into allegations of bribery by company executives in China. In December, Avon announced it was seeking a successor for longtime CEO Andrea Jung.
Coty tried three times to get Avon to talk.
Groupon's accounting problems
Groupon, the online deals company, revised its reported fourth-quarter results, saying they were less than reported. Its independent auditor determined it has a "material weakness" in its internal controls. Shares were off $3.11 to $15.28.
Groupon affirmed its first-quarter guidance, reiterating its revenue forecast of between $510 million and $550 million.
Is Sirius XM Radio a takeover target?
In a filing with the Federal Communications Commission on Friday, Sirius revealed that Liberty has asked the FCC for permission to take "de facto" control of Sirius. But Sirius asked the FCC to "dismiss or deny" the application, The Wall Street Journal said.
Liberty owns preferred stock that is convertible into about 40% of the outstanding common stock of Sirius.
Starbucks up on China expansion plans; Global Payments sags
Starbucks (SBUX) plans a big expansion of its China business, according to reports. The coffee-shop operator plans to triple its number of stores in China to 1,500 from 500 by 2015, John Culver, the head of Starbuck's China and Asia Pacific business, told The Wall Street Journal. Shares rose 78 cents to $56.67.
Credit card processor Global Payments (GPN) said Sunday night it "identified and self-reported unauthorized access into its processing system." In a press release, the company said hackers accessed its processing system and about 1.5 million card numbers "may have been exported." The company said the breach was confined to North America and believes the incident "is contained."
Shares were down $1.76 to $45.74. The shares fell 9.1% on Friday.
A lot of winners
A total of 416 S&P 500 stocks were higher, led by Avon and Tripadvisor (TRIP), and Hartford Financial Services (HIG). The laggards were home builder Lennar (LEN) and Amazon.com.
Meanwhile, 81 Nasdaq-100 shares were higher, led by Nuance Communications (NUAN) and Sirius XM Radio. The laggards were Research In Motion (RIMM) and Amazon.com
|Short hits from the markets -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0600%||0.070%||-14.29%||500.00%|
|5-year Treasury note||1.021%||1.043%||-2.11%||23.01%|
|10-year Treasury note||2.193%||2.216%||-1.04%||17.21%|
|30-year Treasury bond||3.338%||3.345%||-0.21%||15.54%|
|U.S. Dollar Index||78.963||79.138||-0.22%||-1.94%|
|(in U.S. $)|
|U.S. $ in pounds||£0.624||£0.624||-0.08%||-3.03%|
|Euro in dollars||$1.33||$1.34||-0.32%||2.66%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.752||€ 0.748||0.32%||-2.59%|
|U.S. $ in yen||82.51||82.97||-0.58%||7.01%|
|U.S. $ in Chinese||6.32||6.29||-0.01%||-0.09%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$105.23||$103.02||2.15%||6.48%|
So with oil and gasoline going up, up, and away...greed continues to perform really well. The oil lobbyist who own the politicians, and congressmen and women who buy oil stocks, which should be a conflict of interest, can welcome the summer slump that's coming. When oil continues to hover around $4 - $4.50 a gallon, do you think the market rally will continue when the working class starts to cut back...again?
I've already cancelled our trip to Florida. We are going to stay close to the beaches here. Sorry sunshine state, we really love you, but the greedy oil barons just will not stop.
If you're not in it already, you'll be taking a big gamble that more bozos will enter the market and buy the paper from you. For some reason though the lite volume lets me know not alot of people active.
As for the job recovery, I hope it's real. We'll see. That's all I care about. Want jobs to recover. And want commodity prices to go down. Rather have people pump paper than stuff I actually buy on a regular basis.
The new term for the slaughter...
Pump on monday...
Dump tue thru fri...
the PATHETICNESS continues...
Get a cheap old car or truck with a carburetor and switch over to natural gas or propane... its cheaper.. and guess what else... you don't have to pay the state or federal gas tax.... reason... propane is what goes in a gas grill and yes the government has laws to make you pay the tax.. but lets face it... there are laws to stop pot in california... we see how well that's enforced... just by the I.R.S. go figure.... The net is full or sites that sale conversion kits... for like 800 bucks... and with gas the way it is... it would be worth it just to drive back and forth to work so we can pay the taxes there to keep the check drawers up.....
The House and Senate had 3 years prior to last October to pass a budget and they haven't done it yet. The Dems could have easily passed a budget while they had control of both houses under Bush and Obama, nothing happened.
The House has passed a budget, but you can be sure it won't pass the Senate.
There is a lot of belt tightening in Ryan's budget but if we don't start now its going to be worse down the road when it HAS to be done. The problem is that the budget makes cuts in entitlements and government agencies.
I hope I don't ever run into the rest of you guys at the beach. I'd never be able to relax without listening the endless: "Speculation, profit-taking, speculation, profit-taking, speculation, profit-taking, speculation, profit-taking, socialism, speculation, profit-taking,..." ad nauseam...
brent011...I hated to cancel our vacation, but it's the principle of the thing. I'm not going to "reward" oil companies by accepting there deflection of ethical responsibility. How much profit are they making???
I'm glad you feel the same way. If Americans stand together - I know it sounds corny as hell - we can make necessary changes to this manipulation.
Not to mention people that are unemployed, how in the heck can they afford gas? There's not much they can cut back.
Not to worry, when ga**** $5.00 a gallon, Mr. Obama will come riding in on his white horse and save the day by lowering it back to *cough* $3.80 a gallon...
stupid question but why can't the U.S. just prohibit oil speculation?- cut out the greedy big guys?
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- Commodities are trading modestly higher this morning despite strength in the dollar index
- Copper futures are showing interesting this morning despite strength in the dollar index.
- Copper (Sept) has been climbing higher all day so far and just hit another new HoD at $3.16/lb. Sept copper is now +2.1% at $3.15/lb
- Crude oil moved into positive territory in overnight trade as has risen as high as $93.48/barrel this morning. Crude was holding gains ahead ... More
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