S&P 500 Thrives on Strong Earnings, Mergers

by Jonathan Yates | July 21, 2011 1:59 pm

With more than 80% of companies reporting on the S&P 500 beating earnings expectations so far, the Index was up about 1% higher to above 1,340 at midday Thursday. Heavy merger action continued to lift stocks, too.

An upgrade by Robert W. Baird had Robert Half International (NYSE:RHI[1]), the staffing company, up about $4 to over $30, a gain of more than 15%. When poor job results had been reported earlier, Robert Haft International was a top loser. The stock now is trading above its 20-, 50- and 200-day moving averages with a relative strength index of close to 70, the mark for when a stock is considered to be overbought.

Medco Health Solutions (NYSE:MHS[2]) was up over $7, about a 13% gain to over $65 on an announced merger with Express Scripts (NASDAQ:ERSX[3]), the pharmacy benefits giant. Mergers and acquisitions activity in the health care sector is at a record pace for 2011. There were 243 corporate MA transactions in the second quarter of 2011, a 6% increase from the first quarter, according to Levin & Associates.

Morgan Stanley (NYSE:MS[4]) was up more than 8% to about $23.50, picking up around $1.80 in the morning session on a strong earnings report. For the week, Morgan Stanley is up almost 2%. It is trading above its 20- and 50-day moving averages as financials have posted robust numbers and started to recover.

Genworth Financial (NYSE:GNW[5]) continued to plunge, down about 14% to about $8 per share. Mortgage woes continue to drag the stock down: For the week, it is lower by 3%, lower by 7% for the month and more than 20% for the quarter. Earnings by Genworth have fallen by more than 54% for the quarter.

F5 Networks (NASDAQ:FFIV[6]) was off by about $11, a drop of about 10%, to around $100 per share. The tech sector is suffering after Intel’s earnings from late yesterday aroused the bear in traders. F5 Networks is trading below its 20-, 50- and 200-day moving averages. It has a relative strength index of under 37, with 30 considered the floor for when a stock has been oversold.

Down by more than 7.6% was Ingersoll Rand PLC (NYSE:IR[7]) to under $41.40, a loss of more than $3.40 per share. The Irish industrial goods company reported lower earnings than expected. It now is trading below its 20-, 50- and 200-day moving averages with a relative strength index rating of 34.20; Ingersoll Rand PLC is down about 2.5% for the week.

Endnotes:
  1. RHI: http://studio-5.financialcontent.com/investplace/quote?Symbol=RHI
  2. MHS: http://studio-5.financialcontent.com/investplace/quote?Symbol=MHS
  3. ERSX: http://studio-5.financialcontent.com/investplace/quote?Symbol=ERSX
  4. MS: http://studio-5.financialcontent.com/investplace/quote?Symbol=MS
  5. GNW: http://studio-5.financialcontent.com/investplace/quote?Symbol=GNW
  6. FFIV: http://studio-5.financialcontent.com/investplace/quote?Symbol=FFIV
  7. IR: http://studio-5.financialcontent.com/investplace/quote?Symbol=IR

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