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Banks, Builders and … Bedding? — Wednesday’s IP Market Recap

Financials and homebuilders surge; mattress makers hit the mat

   

IPMarketRecap Banks, Builders and ... Bedding?    Wednesday's IP Market RecapA rising tide of optimism helped to light a fire under the markets Wednesday as indices rallied more than 2% on good news from both Europe and the U.S. regarding the possibility of stimulus measures to help jump-start their flagging economic growth.

In the U.S., Atlanta Fed president Dennis Lockhart, who is a member of the Federal Reserve’s policy-setting committee, said continuing Operation Twist is now “an option on the table.” The policy, which swaps short-term bonds for ones with a longer duration to keep interest rates low, currently is set to expire at the end of the month.

In Europe, comments from the European Central Bank and a new proposal for European-wide bank rescues and bailouts helped to spur optimism.

The net result was a banner day on Wall Street, with the Nasdaq climbing 2.4% to 2,844, the Dow Jones gaining 2.37% to 12,414, and the S&P ending the day up 2.3% to 1,315.

Financial stocks surged for a second straight day, with Bank of America (NYSE:BAC) tacking on 7.7% gains to Tuesday’s 4% advance. Citigroup (NYSE:C) forged ahead by 5.4%, Morgan Stanley (NYSE:MS) roared up 8%, and JPMorgan (NYSE:JPM) — the “laggard” of the group — still managed a 3.4% gain.

Homebuilders also saw a jolt of momentum after Hovnavian (NYSE:HOV) reported its first quarterly profit in more than two years. Profit of $1.8 million (2 cents per share) vs. a year-ago loss of $72.7 million (69 cents) led HOV shares to a 18% march. KB Home (NYSE:KBH) and Ryland Group (NYSE:RYL) rode the coattails, up a respective 7.4% and 5.8%.

Tech stocks also moved ahead smartly, with Oracle (NASDAQ:ORCL, +3%), Microsoft (NASDAQ:MSFT, +3%) and IBM (NYSE:IBM, +2.5%) headed higher, and even beaten-down Facebook (NASDAQ:FB) finding momentum with a 3%-plus gain.

Making a rare (and horrid) show Wednesday were mattress makers, which took it on the chin as Tempur-Pedic (NYSE:TPX) forecast a disappointing second quarter. Sales in North America are running below plan, leading the company to cut guidance for the year. Investors led a mass exodus of almost 50% on the day. Meanwhile, Mattress Firm’s (NASDAQ:MFRM) fiscal first-quarter profit soared after reporting improved same-store sales, but shares plummeted more than 20% as revenue missed analyst expectations.

The combination of negative news from Mattress Firm and Tempur-Pedic weighed on shares of peer and innocent bystander Select Comfort (NASDAQ:SCSS), which fell also dropped more than 20%.

Finally, for those looking for additional respite to end the day, Diageo (NYSE:DEO) announced it would boost production of scotch whiskey during the next 10 years in response to consumer demand. Investors cheered the news by buying up the stock more than 4% — a nice, smooth finish to the day.

Three Up

  • Iron Mountain (NYSE:IRM): Up 13.8% ($3.92) to $32.32.
  • Terex (NYSE:TEX): Up 13.8% ($1.80) to $18.15.
  • Groupon (NASDAQ:GRPN): Up 8.7% (85 cents) to $10.63.

Three Down

  • James River Coal (NASDAQ:JRCC): Down 4.3% (10 cents) to $2.24.
  • Barrick Gold (NYSE:ABX): Down 3.8% ($1.60) to $40.45.
  • Kinder Morgan (NYSE:KMI): Down 3.4% ($1.12) to $31.90.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long MSFT.


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/banks-builders-and-bedding-wednesdays-ip-market-recap-bac-tpx-mfrm-hov/.

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