The S&P 500 pushed higher on Thursday — recovering from mid-morning weakness — to post modest gains in another relatively quiet session. The world’s attention has been on the dramatic melt-up underway in Chinese stocks, which leaves little speculative firepower for Wall Street.
As a result, U.S. large-caps continue to trade near levels first hit in November, while the NYSE Composite Index remains constrained by overhead resistance going all the way back to July.
In the end, the Dow Jones Industrial Average gained 0.3%, the S&P 500 gained 0.5%, the Nasdaq Composite gained 0.5% and the Russell 2000 lost 0.3%.
The U.S. dollar rebounded as Federal Reserve officials have tried to downplay the significance of the soft March payrolls report. The greenback gained 1% against the euro to return to levels seen before the Fed’s March 18 policy announcement. Year-to-date, the dollar is up about 12% against the euro.
The timing of the Fed’s first rate hike since 2006 remains the main obsession among traders. A Wall Street Journal poll released today of 60 economists find just 18% expect a June rate hike while 65% favor September.
The first-quarter earnings season got off to an inauspicious start, which is worrisome since results are likely to be weak due to the drag from the stronger dollar on foreign earnings as well as the hit to energy sector profits from the drop in crude oil. Alcoa Inc (NYSE:AA) lost 3.4% after reporting mixed results after the bell on Wednesday, while Bed Bath & Beyond Inc. (NASDAQ:BBBY) dropped 5.4%.
There’s been a lot of M&A chatter, with CNBC reporting that Intel Corporation (NASDAQ:INTC) has broken off negotiations with Altera Corporation (NASDAQ:ALTR) after the company was unwilling to accept its buyout offer, said to be in the low $50s per share. ALTR stock was down some 6% in premarket trading but rebounded as investors believe the story isn’t quite over yet.
In the pharmaceuticals space, deal talk whipped around Mylan NV (NASDAQ:MYL), Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) and Perrigo (NYSE:PRGO). On Wednesday morning, MYL made a $205-a-share offer for PRGO. There has been chatter that MYL was interested in PRGO with reports now that the company has hired deal advisors. Teva is considered to be a possible player too.
At the sector level, energy stocks led the way with a 1.5% gain, lifting the Market Vectors Oil Services ETF (NYSEARCA:OIH) fund recommended to Edge subscribers by 3.2%.
Edge Pro subscribers have been enjoying the action in Twitter Inc (NYSE:TWTR) on chatter that Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) could be looking at acquiring the social media star. The April $50 calls they’ve been holding since late March are up 134% with room for more.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
