The bulls were pleased by dovish remarks on Tuesday from Fed Chairperson Janet Yellen, who said not to expect any rate hikes for the next couple FOMC meetings. She later added to her remarks by noting that the Fed won’t raise rates until it finds confidence in the economic recovery. Futures traders interpreted her remarks to mean the first rate hike will be at least in October, rather than the previously expected June meeting.
Also this morning, the S&P Case-Shiller composite index reported that home prices in the 20-city index improved 4.5% year-over-year in December, surpassing the 4.3% from the previous month’s reading.
In response, the Dow Jones Industrial Average improved 0.51%, the S&P 500 gained 0.28% and the Nasdaq rose by 0.14%. Both the Dow and S&P again set new highs.
Technology and telecommunications services were the top sectors today, with solar energy joining the fray. That put First Solar, Inc. (NASDAQ:FSLR), Home Depot Inc (NYSE:HD) and Toll Brothers Inc (NYSE:TOL) among Tuesday’s best stocks.
Home Depot Inc (HD)
The No. 1 home improvement retailer was up 4% today after crushing analysts’ fourth-quarter earnings estimates. Home Depot earnings came to $1 per share excluding items, beating the Street’s estimates for 89 cents. Meanwhile, revenues that improved 8.5% to $19.2 billion cleared a bar of $18.7 billion.
As if that wasn’t enough to propel HD stock higher, Home Depot also announced an $18 billion stock buyback and hiked its dividend 26% to 59 cents per share. Talk about a triple play of good news!
HD stock closed at an all-time high of $116.83 after almost touching $118 earlier in the day.
Toll Brothers Inc (TOL)
Toll Brothers also beat the Street today, reporting fiscal Q1 earnings that grew 76% year-over-year to 44 cents per share vs. estimates of 30 cents. Meanwhile, revenues improved 33% to $853 million, well ahead of expectations for $781 million.
Even with David Blitzer of S&P Dow Jones Indices spoiling the Case-Shiller report by saying that “the housing recovery is faltering” with weakness in construction and new home sales, TOL stock was still higher by nearly 4%, and lifted most of the other homebuilders as well.
Toll Brothers released a statement saying it is encouraged by strong employment and wage data, as well as continuing home price appreciation.
First Solar, Inc (FSLR)
It was a sunny day for FSLR stock, rising a blistering 10% amid news that it will be forming a publicly traded yield co by merging assets with SunPower Corporation (NASDAQ:SPWR).
Another positive for the solar energy stock was an analyst upgrade by Vishal Shah of Deutsche Bank AG (USA) (NYSE:DB), who raised his rating on FSLR stock from “hold” to “buy” and upped the price target from $60 to $68. Shah said the “Joint Yieldco decision is probably the best strategy for both companies.”
First Solar will be releasing its Q4 earnings report after the closing bell today. Judging from today’s performance, traders are expecting solid earnings from FSLR.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
