The S&P 500 rose by 0.40% and the Dow was higher by 0.17%. The major averages started the day on a positive note and gained momentum for the majority of the day before losing stream and giving up half of today’s gains.
Financials finished in line with the market today. Banks and life insurers outperformed. Money has continued to move from staples to the financial sector. Headline risk for the major banks is lower after they have reported earnings. After a great run higher staples have seen momentum wane and money flows to other areas of the market. Insurers were strong on positive news from Aflac. Bank of America outpaced the group with an increase of better than 1%.
Semiconductors were the strongest industry group in the technology sector. Semiconductor equipment makers were strong today as several companies in that space reported strong quarterly earnings. Large hardware companies like Apple, Dell, EMC, and IBM all finished slightly higher on the day.
Aerospace and defense stocks were particularly strong on the day. Boeing climbed by better than 1% on stronger earnings. General Dynamics and Northrop Grumann were higher as it becomes clear they will feel little impact from the sequester. Raytheon rose by 2% after they reported better than expected earnings and raised their full year earnings guidance.
Materials stocks were higher today on strong earnings reports and commodity strength. Dow Chemical was higher by more than 5% on earnings. Potash, paper stocks, and chemical names all worked higher as earnings in these areas have been generally better than expected. Cliffs Natural Resources spiked higher by 15% in response to better than expected earnings released after the close.
Healthcare underperformed as pharmaceutical and life sciences stocks lagged. Biotech and drug stores were leaders in the sector. Several pharmaceutical stocks were off after earnings. These stocks have been clear leaders this year and there was some profit taking on earnings. Johnson & Johnson rose by 1% as they announced an 8% dividend increase. JNJ has raised its dividend for 51 straight years.
Consumer discretionary stocks outpaced the market today. Several apparel companies reported better than expected earnings and were higher on the day. Restaurants and casual dining establishments were in favor today. Auto parts retailers were strong across the board after O’Reilly automotive reported better than expected earnings.
Source: PFS Group
