The S&P 500 rallied in the final hour of trading to finish 0.16% higher while the Dow was off slightly closing down 0.03%.
Energy was a leading sector on the day gaining 1.4%. Schlumberger and Baker Hughes both released strong earnings reports. The gains in the sector were broad based as cyclical stocks were in favor. Earnings in the sector have been strong and the recent rise in crude suggests further strength for the sector as well.
The industrial sector was also higher by more than 1% today. General Electric, Ingersoll Rand, and Honeywell all reported strong earnings. Industrial companies were aggressively bought as they gave better than expected earnings. Management teams reported improving business in Europe and record orders backlogs. General Electric set the tone for the sector. The bellwether traded higher by more than 5% for much of the day and closed higher by 4.6%. Ingersoll Rand is another old-line industrial that roared higher on the day closing up 5%. Early in the reporting season 905 of industrial stocks are reporting earnings in excess of estimates. More importantly, they have issued better than expected earnings forecasts for the rest of the year.
Aerospace and defense names also spiked again on strong earnings reports. The space has risen in the face of concerns regarding the sequestration all year.
Healthcare was another large gainer on the day. Biotechs were the strongest area in the sector today. Biotechnology shares were bought across the board. There was little news in the area. Technically, the group is attractive to momentum investors that want to ride the current trend. Managed care names did well as United Health gained more than 1% after the huge run higher after earnings. Large cap stalwarts, Johnson & Johnson and Pfizer, saw large spikes in the final few hours of trading to post gains of better than 2%.
Weakness today came from the technology sector. The tech heavy NASDAQ was lower by 0.66%. Large cap tech came under severe pressure after Microsoft and Google issued disappointing earnings announcements. MSFT was lower by more than 11% and GOOG fell by 1.5%. Advanced Micro Devices fell by more than 14% and they also released weaker than expected earnings.
Financials were in line with the market after being leaders for much of the week. It was impressive that after such explosive gains in the sector earlier in the week that they held those gains today. Capital One was a leader gaining more than 3% on better than expected earnings. Charles Schwab gained more than 1% and has bounced back nicely after some profit taking took place after earnings earlier in the week.
Commodities were mostly higher with precious metals, wheat, and copper trading higher while crude underperformed. Gold rose by 0.8% and silver closed on its highs gaining 0.50%.
Source: PFS Group
