A back-and-forth between banks down and banks up has been the pattern of trading for several weeks. Yesterday it was banks down for the first hour or so, and then Treasury Secretary Tim Geithner spoke to Congress about the health of the financial companies. Curing testimony, he said that the “vast majority” of banks have more capital than they need.
Along with the Treasury Secretary’s positive spin, some non-spin items hit the news in the form of good earnings from U.S. Bancorp (USB) and its willingness to pay back the $6.6 billion bailout money. And Regions Financial’s (RF) upbeat press conference along with solid earnings from State Street (STT) brought bargain hunters into the sector.
Even though the financials led the market, there was buying in the technology sector, as well. United Technologies (UTX) backed its prior positive guidance for its full-year earnings, and Hewlett-Packard (HPQ), IBM, and Intel (INTC) all enjoyed gains.
After the close, however, Yahoo (YHOO) reported that its Q1 income fell to 8 cents a share versus an expected 6 to 10 cents. Although it matched analysts’ estimates, they had set the bar rather low and some even thought that YHOO should have exceeded those expectations. Along with earnings, the company said that it would cut jobs by 5%.
At the close, the Dow Jones Industrial Average (DJI) had gained 128 points to 7,970, the S&P 500 (SPX) was ahead by 18 points at 850, and the Nasdaq (NASD) rose 36 points to 1,645.
The New York Stock Exchange traded 1.7 billion shares with advancers ahead by 6-to-1, and on the Nasdaq 825 million shares crossed with advancers there ahead by 3-to-1.
The May crude oil contract rose 63 cents to $46.51 a barrel, and the Amex Energy SPDR (XLE) gained 86 cents to $44.42.
Gold for June delivery finished the day lower by $4.80 at $882.70 an ounce. The PHLX Gold/Silver Index (XAU) fell $1.70, closing at $116.09.
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What the Markets Are Saying
Even though there was some heavy buying in the financials yesterday, it was sporadic with volume and breadth numbers less than on Monday’s selling. All of our internal indicators are still overbought while the sentiment numbers remain neutral to overbought.
Yesterday’s spring-back from the 20-day moving averages on each of the popular indices does not mean that the selling is over. But yesterday’s strong close could mean that we open higher today, which would give sellers an opportunity to unload more of their poor performers.
An indication that the bear market rally is nearing — or has already made — its top is the decline in buying volume and the increase in selling volume. A quick run of the Dow-30 (DJI) stocks’ performance in the past 10 days shows a pattern that would make any bull perspire.
Stock after stock shows a pattern of lower volume on the buying days and higher on the selling days. And one of my favorite technical services that relies on “point and figure” analysis said last night, “While we didn’t see massive drops in our bullish percent indexes, we did still see a handful of new near-term sell signals across many stocks and funds across various asset classes.”
Today’s Trading Landscape
Earnings to be reported include: Advanced Analogic Technologies, Affymetrix, Air Products and Chemicals, AirTran Holdings, Alcon, Allegheny Technologies, Alliance Data, AllianceBernstein Holding L.P., Altria Group, Ambassadors Group, Amdocs Ltd, Apple, Arkansas Best Corp, Astoria Financial Corp, AT&T, ATMI and Axsys Technologies.
Banco Latinoamericano de Exportaciones, BankAtlantic Bancorp, C.R. Bard, CH Energy Group, Chemed Corp, Chipotle Mexican Grill, CNH Global N.V., Cohen & Steers, Columbia Banking System, Continental Airlines, Core Laboratories, CoStar Group, Covanta Holding Corp, Cullen/Frost Bankers and CyberOptics.
Destination Maternity Corp, Dover Corp, Dyax Corp, eBay, Elan Corp plc, EnCana Corp, Encore Wire, Energen, EPIQ Systems, Equifax, Equinix, Evans Bancorp, Exponent, F5 Networks, Famous Dave’s of America, FBR Capital Markets, FICO, First Midwest Bancorp, First Place Financial, Freeport-McMoRan Copper & Gold, Freescale Semiconductor, Gentex, Genzyme Corp, GlaxoSmithKline, Glimcher Realty Trust and Graco, Gulf Island Fabrication.
Huaneng Power Int’l, Hub Group, iGate Corp, Imation Corp, Ingersoll-Rand Co Ltd, Intersil Corp, iRobot Corp, Journal Communications, Kensey Nash Corp, Kimberly-Clark, Knight Capital Group, Knight Transportation, LaSalle Hotel Properties, Leggett & Platt, Lennox Int’l, Logitech Int’l, McDonald’s Corp, MetroCorp Bancshares, MKS Instruments, Morgan Stanley and MTS Systems.
Netgear, NewMarket Corp, Noble Corp Baar, Northrop Grumman, Novellus Systems, NuVasive, Overstock.com, P.F. Chang’s China Bistro, Pactiv, Pepsi Bottling Group, Platinum Underwriters Holdings Ltd, Precision Drilling Trust, Provident Financial Services, Qualcomm, Quidel Corp, Raymond James, Rewards Network, Rimage Corp, Robert Half Int’l, Rome Bancorp and Ryder System.
S.Y. Bancorp, Sanmina-SCI Corp, Saul Centers, SLM Corp, Snap-on, Span-America Medical Systems, St. Jude Medical, Steel Dynamics, Susquehanna Bancshares, Sybase, Synovus Financial Corp, T. Rowe Price, Teledyne Technologies, Temple-Inland, Texas Capital Bancshares, The Boeing Co, Theravance, Thomas & Betts, Torchmark, Tractor Supply Co, TriQuint Semiconductor and TrueBlue.
UMB Financial, VCA Antech, Vitran Corp, VMware, Wablec Corp, Waste Services, WellPoint, Wells Fargo & Co, Wipro Ltd, Wolverine World Wide, Woodward, Xilinx, Yum! Brands, and Zoll.
In terms of economic reports, the Mortgage Application Refinance Index and U.S. Energy Dept. Oil Inventories for April 17 are due.
Late news: Altria (MO) reported Q1 of 39 cents versus the 38-cent estimate. Capital One (COF) is expected to report a greater-than-expected loss. AT&T reported Q1 of 53 cents versus a 48-cent estimate. Boeing (BA) reported Q1 of 86 cents versus 91 cents and reduced its estimate for this year. The government will begin reviewing the “stress-test” results with the banks on Friday.
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