Reply #80: closing the door and sweeping the floor

[UpInArms]

Dow 13,089.89 135.95 (1.05%)
Nasdaq 2,547.89 23.35 (0.92%)
S&P 500 1,495.42 15.01 (1.01%)
10-Yr Bond 4.646% 0.024

NYSE Volume 3,260,176,000
Nasdaq Volume 2,735,255,000

4:20 pm : Finally, the wait is over, as the attraction of a psychologically important number such as 13,000 on the Dow helped underpin a bullish bias right out of the gate and well into the close. All three major indices finished just off their highs but averaged a one-day gain of roughly 1.0%.

While corporate profits continued to pour in better than analysts' lowered expectations, arming the bulls with enough momentum to power the Dow further into record territory, it is worth noting that news other than earnings also had a profound effect on the blue-chip index.

Alcoa (AA 35.76 +1.81) soared 5.3% after saying it will explore the possible sale of its packaging unit. Another example was IBM (IBM 101.46 +2.97), which nearly matched yesterday's surprise 3.4% surge following very upbeat buyback news.

Nonetheless, more evidence that Wall Street analysts were overly pessimistic going into the Q1 earnings season continued to provide a floor of support for stocks even though economic trends remain worrisome.

On the economic front, March durable goods rose a stronger than expected 3.4%, boosted significantly by aircraft orders which also helped Boeing (BA 94.69 +1.02) shareholders look past management's conservative guidance.

Even though the headline durable goods number combined with an upward revision to the February figure still doesn't wipe out the huge 8.8% drop in January, investors found solace in the fact that core capital equipment orders bounced back after two months of declines with a healthy 4.7% increase. Non-defense capital goods orders excluding transportation provide a clearer read on underlying business investment.

Investors were also eyeing the Fed's Beige Book to see what it may or may not say about the economy. However, after the report to be used at the May 9 FOMC meeting showed "modest or moderate" expansion, "only modest overall wage increases," and generally stable consumer prices, stocks caught another wave of buying interest.

A bidding war taking shape that is likely to result in the largest banking deal ever was also noteworthy. Brokerage stocks got a lift after a consortium led by the Royal Bank of Scotland announced a $98 bln counterbid to Barclays' (BCS 58.47 +1.62) $91 bln offer for ABN Amro (ABN 49.77 +2.37) earlier in the week.

With the market already questioning whether gasoline supplies will be sufficient by the start of the summer driving season, an 11th straight weekly decline in inventories, and refinery utilization falling to 87.8%, boosting oil prices nearly 2.0%, still wasn't enough to deter investors. Crude for June delivery closed near $65.80/bbl. The Energy sector surged more than 2.0%, providing some influential leadership as the day's best performing sector.

Technology also provided notable leadership to the upside as investors scooped up bellwethers like Apple (AAPL 95.34 +2.10) and Qualcomm (QCOM 45.34 +0.98) in anticipation of more earnings surprises in the what is expected to be one of the largest contributors to profit growth on the S&P 500 this year.

Consumer Discretionary was another bright spot Wednesday, getting its biggest boost from Amazon.com (AMZN 56.81 +12.06), which soared 27% after management raised its full-year outlook and said Q1 profits more than doubled. DJ30 +135.95 NASDAQ +23.35 SP500 +15.01 NASDAQ Dec/Adv/Vol 1251/1827/2.69 bln NYSE Dec/Adv/Vol 943/2329/1.67 bln

3:30 pm : All three major averages continue to sport sizable gains and are now up 1.0% each going into the close. The Dow is not only on pace to close well above 13,000 but is also on track to finish with its 17th gain in 19 sessions. It is also worth noting that above average volume lends even more conviction behind today’s widespread buying efforts.

The NYSE looks like more than 1.5 bln shares will exchange hands today while the Nasdaq surpassed 1.0 bln shares by 11:30 ET and is already above 2.0 shares. Sun Microsystems (SUNW 5.24 -0.70), the S&P 500’s worst performer (-12%), has seen 300 mln shares traded (nearly 5 times its average), while Amazon.com (AMZN 56.17 +11.42), the S&P 500’s best performer (+25%), has traded 13 times its average daily volume. DJ30 +140.02 NASDAQ +25.47 SP500 +15.52 NASDAQ Dec/Adv/Vol 1159/1907/2.15 bln NYSE Dec/Adv/Vol 886/2349/1.30 bln



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