The Dow was 1.05% higher today and the S&P 500 rallied by 1.04%. The market opened higher and gained strength throughout the morning. The Dow dropped by better than 100 points in a few minutes a little after 1:00 pm eastern on an erroneous Twitter post from the AP regarding an attack on the White House. You can’t make this stuff up! The market almost immediately recouped its gains when the error was discovered and remainded strong throughout the day.
Risk-on sectors were in favor today. Homebuilders, airlines, semiconductors, and banks outperformed. Homebuilders were bought after an analyst upgraded the entire group. Airlines were in favor after Delta and US Air both beat earnings expectations. Financials were strong across the board. Several insurance companies reported better than expected earnings.
To date, better than 70% of companies that have reported earnings have topped earnings estimates. 42% of those that have reported have exceeded revenue estimates.
Commodities were mostly lower with precious metals, copper, natural gas, crude, and grain all trading below the tape. Gold closed off by 0.79% and silver was off by 2%. Crude traded marginally higher and natural gas had a late day selloff to close lower by 1%.
Financials were especially strong today gaining 1.6%. Bank of America and Morgan Stanley were both up sharply after they received analyst upgrades. Travelers and MetLife both issued great earnings reports and had a positive impact on life insurers.
Technology continued to rebound with a gain of better than 1%. Several semiconductor companies issued better than expected earnings reports before the open today. There were more positive earnings surprises after the close also. Apple reported earnings ahead of expectations after the close. They announced they were going to double their return of capital program and increase their dividend by 15%. On the negative side, they guided their revenues forecast for the next quarter significantly lower. The stock trades higher after hours. We will see how it trades tomorrow.
After several disappointing economic releases last week, industrial stocks sold off sharply. Several industrial names reported earnings prior to the open today. While earnings releases were not spectacular, they did meet expectations. Also, many key industrial companies did not guide revenue or earnings estimates for the rest of the year lower.
Energy traded higher by 1.25%. Integrated energy names, oil service, and drillers all gained on the day. Coal names were the weakest area of the sector.
Media stocks underperformed the broad tape after a strong move higher over the last week. The sector was higher but it lagged the tape. Netflix was the big winner on the day surging higher by more than 24%. Netflix reported they added more streaming customers than projected.
Source: PFS Group
