After several attempts that failed to hold, the Dow Jones Industrial Average (DJI) finally closed over 11,000, making it to 11, 005.97. It was the first time since September 2008 that the widely followed index closed above the psychologically important number.
But the S&P 500 (SPX) missed its key number of 1,200 by less than a point (intraday) and closed at 1,196.48. However, the broad index did close higher for the sixth time in seven days.
The Dow was helped by an anticipation of better earnings for the 30 blue-chip stocks that make up the index. Alcoa (AA), traditionally the first company of the index to report earnings, rose 1.3% in anticipation of a better-than-expected earnings number.
An agreement by the European Union to provide financial aid to Greece of 30 billion euros at below market rates resulted in a stronger euro. But after a deeper loss earlier in the day, the U.S. dollar managed to take back most of the drubbing it received, and it closed with only a 0.4% loss.
At the close, the Dow was up 9 points to 11,006, the S&P 500 gained 2 points at 1,196, and the Nasdaq (NASD) was up 4 points to 2,458.
Volume on the exchanges was again very light, with the NYSE trading just 975 million shares and the Nasdaq crossing just 541 million shares. On both exchanges, advancers led decliners by about 7-to-6.
Crude oil for May delivery fell 58 cents to $84.34 a barrel, again on higher supply levels despite talk of higher demand from China. The Energy Select Sector SPDR (XLE) rose 14 cents to $59.97.
April gold ended 50 cents higher at $1,161.60 an ounce, and the PHLX Gold/Silver Sector Index (XAU) fell $2.04 to $174.96.
What the Markets Are Saying
Yesterday the CBOE Volatility Index (VIX), a key measure of investor nervousness about upcoming market swings, fell 3.5% to 15.58, its lowest settle since July 2007. This index is now indicating unusual complacency, which means that most investors are anticipating a further rise in the stock market. The problem is, however, that when the VIX is this low, it is often a predictor of an imminent correction. (See the April 9 Daily Market Outlook.)
And analysts too are optimistic. Thompson Reuters reports that key analysts are expecting the average Q1 earnings of the S&P 500 to be higher by 36.8% than one year ago. That would be an extraordinary achievement. So are they overreaching?
After the shocker from Alcoa (AA), it will be interesting to see if the market can hang onto its gains. The initial report last night showed a loss of 20 cents, but this morning, the company said that with one-time items and discontinued operations, it had a Q1 profit of 10 cents, which was what analysts were expecting. The Wall Street Journal reports, “That’s the magic number, and it was in the middle of the range predicted by Wall Street’s best and brightest.”
The bulls had better hope that the remainder of the week gives them something to smile about from Intel (INTC), JPMorgan Chase (JPM), Bank of America (BAC) and Google (GOOG). If not, it’s going to be a long, cold spring.
Today’s Trading Landscape
Earnings to be reported before the opening include: Fastenal, Infosys and Talbots.
Earnings to be reported after the close: Adtran, CSX Corp., Healthcare Services Group and Intel.
Economic reports due: ICSC-Goldman Sachs store sales, international trade (the consensus expects -$39 billion), import and export prices and Redbook.
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- Wal-Mart Ready to Break to New Highs
- 5 Rules of Engagement for Trading Earnings
- Big Names Don’t Always Make Good Earnings Trades
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