The Dow advanced again yesterday for the 19th consecutive Tuesday in which the index has closed higher. The advance was attributed to an upgrade by Goldman Sachs (NYSE: GS) of its year-end target for the S&P 500, which it raised from 1,575 to 1,750. Goldman’s chief equity strategist said he expects higher dividends from S&P 500 companies, especially from the technology, financial and consumer discretionary industries where firms are cash rich.
JPMorgan Chase (NYSE:JPM) led the financials, up 1.4%, following stockholders’ decision to continue with the combined post of CEO and Chairman, thus retaining Jamie Dimon in both positions. Home Depot (NYSE:HD) reported higher-than-expected earnings and led the retail group with a gain of 2.5%.
At Tuesday’s close, the Dow Jones Industrial Average gained 52 points to 15,388, the S&P 500 rose 3 points to 1,669, and the Nasdaq closed up 6 points at 3,502. The NYSE traded 686 million shares and the Nasdaq crossed 412 million. Advancers outpaced decliners on both major exchanges by about 1.2-to-1.
In the past four days, the media has been bombarded with comments and interviews from various voting and non-voting Fed regional presidents. The result has been a wild fluctuation of bond prices, and thus, rates on the 10-year and 30-year bond. On Tuesday, the 10-year Treasury rose 6/32 to yield 1.944%, and the 30-year Treasury bond gained 16/32 to yield 3.148%.
On Tuesday, the influential St. Louis Fed President, James Bullard, said that he favored continuing with the present bond-buying plan, but earlier other members said that ending the program as soon as this fall should be considered.
Today, Fed Chairman Ben Bernanke will speak, and each word will be thoroughly analyzed for its impact on both the bond and stock market. You can be sure that quantitative easing (QE) will be front and center.
This week, four regional presidents have commented on their assessment of the economy and the possible unwinding of their bond purchase programs. Some said that unwinding was necessary, others that it could be increased, and two indicated that the program was just right — a real Goldilocks summary.
Bernanke’s testimony may be important as to the future course of stocks, but for now the bull is still riding strong and it appears that little, other than an unlikely unwinding of the Fed’s QE, will put an end to the advance.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.