Stocks moved higher Wednesday as traders digested a heavy flow of earnings and a positive housing report, setting aside some overnight nervousness related to the European Central Bank’s support of Greek banks amid ongoing tensions between Athens and the European establishment over its bailout program.
At the sector level, transportation and technology stocks are grabbing the reins here as materials and energy cool their heels a little. Apple Inc. (NASDAQ:AAPL) is looking very good, threatening to break out of a three-month consolidation range as expectations build for the in-store release of the Apple Watch (April 24) and quarterly results (April 27). I’ve recommended Edge Pro subscribers play along with a position in the April $128 calls.
Treasury bonds suffered, capping their worst three-day loss — as represented by the iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSEARCA:TLT) — since February, as evidence grows that inflation is about to make a return.
In the end, the Dow Jones Industrial Average gained 0.5%, the S&P 500 gained 0.5%, the Nasdaq Composite gained 0.4%, and the Russell 2000 gained 0.1%.
Tech stocks were the day’s leaders, rising 1.1% as a group thanks to a strong showing by chipmakers; although, it should be noted, every major sector group finished in the green.
Broadcom Corporation (NASDAQ:BRCM) gained 5% on an earnings beat driven by high-end smartphones. The ProShares Ultra Semiconductors (ETF) (NYSEARCA:USD) that I’ve recommended to Edge subscribers gained 2.1% and looks ready for much more as it emerges from a three-month consolidation pattern. A return to December-March overhead resistance for the USD would be worth a near 6% rise from here.
In earnings news, fast-food pushers Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD) gained 4% and 3.1%, respectively, on Q1 earnings beats. MCD was in focus for upcoming details on its latest turnaround plan given a worse-than-expected 3.9% drop in comp-store sales.
On the economic front, signs of strength are materializing in the housing market amid low inventory levels — a classic recipe for higher home prices heading into the summer. Existing home sales surged at a 10.4% annual rate in March to the best pace since September 2013.
In percentage terms, the 6.1% month-over-month gain was the strongest since December 2010 and among the very highest in the 16-year history of the data series. The median home price was up 7.8% over last year for the best reading since last February.
After the close, Facebook Inc (NASDAQ:FB) reported better-than-expected earnings, but soft revenues pushed shares down more than 2% in after-hours trading. EBay Inc (NASDAQ:EBAY) and Qualcomm, Inc. (NASDAQ:QCOM) report top- and bottom-line beats. Texas Instruments Incorporated (NASDAQ:TXN) reported revenue and earnings misses, sending shares down 7.6% in after-hours trading.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
