Wednesday, a hop up on the opening resulted from an Automatic Data Processing (ADP) Employment Report that showed job losses in April at just 491,000 compared to the expected 645,000. But profit-taking quickly took back the gains when traders reacted to reports that indicated that Bank of America (BAC) and Citigroup (C) need to raise more capital. And the utility sector lagged on poor earnings from PG&E (PCG).
But by late morning, stocks were beginning to move ahead again on better-than-expected earnings from Disney (DIS). Then, later in the day, strong earnings from Transocean (RIG), published denials by the Wall Street Journal that neither Bank of America nor Citigroup would need new capital and the Senate’s approval of an amendment to make it less costly for financial institutions to exit TARP led a rally straight into the close. The financial sector closed near its high of the day.
But after the close, another story in the WSJ said that the government’s stress tests of the nation’s largest 19 banks will result in needed capital by many. The names highlighted were Wells Fargo (WFC), Morgan Stanley (MS), GMAC, State Street Corp (STT), Bank of America, Citigroup, and Regions Financial (RF).
At the closing bell, the Dow Jones Industrial Average (DJI) was up 102 points, finishing at 8,512. The S&P 500 (SPX) gained 16 points at 920 and the Nasdaq (NASD) rose five points to 1,759.
Volume on the NYSE expanded to just under 1.9 billion shares and to 906 million shares on the Nasdaq. On the Big Board, advancers outnumbered decliners by over 2-to-1 but that ratio was down to 3-to-2 on Nasdaq.
The June crude oil contract gained $2.50, ending the day at a six-month high of $56.34 a barrel, and the Amex Energy SPDR (XLE) gained $1.88 at $50.37.
Gold for June delivery rose $6.70 on fears of future inflation, closing at $911 an ounce. The PHLX Gold/Silver Index (XAU) gained $6.97 to close at $135.49.
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What the Markets Are Saying
On Monday, by smashing through Thursday’s high at 889, the S&P 500 (SPX) set its target squarely on the important Jan. 6 high close of 935 and its intraday high of 944. And just above that are two other major barriers — the 200-day exponential moving average at 951 and the 200-day simple moving average at 958.
In other words, the bulls have their work cut out for them because, in addition to these major moving averages, they must overcome a massive supply zone that was formed in October and November from SPX 920 to 1,000.
And curiously, while buyers of the financial stocks will be focusing on the results of the bank stress test, the Financial Sector SPDR (XLF) is approaching a major resistance zone at $13-$14 where it meets both of the 200-day moving averages and a key Fibonacci number. That number is 23.6% and it is a retracement of the entire bear market in financial stocks.
With massive barriers now just trading minutes away, it would be wise to again be very cautious. If stocks are to overcome these obstacles there will be no doubt that the market has shown the way up, but if it fails now prepare for a long hot summer.
Today’s Trading Landscape
Earnings to be reported include: 21st Century Holding, 3D Systems, Abraxis BioScience, Accuride Corp, Activision Blizzard, Adaptec, Aecom, Aercap Holdings N.V., Air Methods, Aircastle Ltd, Aldila, Alexandria Real Estate, Alliant Techsystems, Allied World Assurance Co Holdings Ltd, Allion Healthcare, Alnylam Pharmaceuticals, Ambu A/S, American CareSource Holdings, American International Group, American Public Education, American Reprographics Co, American Vanguard, Amicus Therapeutics, AMN Healthcare Services, Animal Health Int’l, ANSYS, Ares Capital Corp, ArQule, Assured Guaranty, Atlas Energy Resources and ATP Oil & Gas.
Babcock & Brown Air Ltd, Bally Technologies, Banco de Chile, Bancolombia SA, Bankrate, BCE, Bebe Stores, Biodel, BioMimetic Therapeutics, Blackrock Kelso Capital Corp, Blue Nile, Boise Cascade Holdings LLC, Boots and Coots Int’l Well Control, Breitburn Energy Partners LP, Brigham Exploration Co, Brightpoint and Brooks Automation.
Cablevision Systems Corp, Cadence Pharmaceuticals, CAI Int’l, California Pizza Kitchen, Cameron, CapitalSource, Caplease, Cardiac Science, Caribou Coffee Co, CBS Corp, CECO Environmental, Cenveo, Checkpoint Systems, Chordiant Software, Cinemark Holdings, Citizens, Clean Energy Fuels Corp, Coherent, Coinstar, Comforce Corp, Comverge, Consolidated Communications, Constant Contact, Continental Resources, Cornell Companies, Cornerstone Therapeutics, Corrections Corp of America, Credicorp, Crocs and CTC Media.
D&E Communications, Dana Holding Corp, Dawson Geophysical, DCP Midstream Partners LP, DCT Industrial Trust, DealerTrack Holdings, Delek US Holdings, Deutsche Telekom, DG FastChannel, Diamond Management & Technology Consultants, Diodes, DIVX, Double Eagle Petroleum and Mining, Dune Energy, DXP Enterprises and Dynegy.
Eagle Rock Energy Partners LP, Eastern Insurance, Einstein Noah Restaurant Group, Eldorado Gold Corp, Elizabeth Arden, Emergent Biosolutions, Energy Recovery, Entercom Communications, Enzon Pharmaceuticals, Eurand NV, Evolving Systems, Exelixis, Exterran Holdings, EZchip Semiconductor Ltd, FBL Financial Group, FelCor Lodging Trust, Ferro Corp, FiberTower Corp, Flotek Industries, Frontier Communications Corp, Frontier Oil, Fuel Systems Solutions and Furniture Brands.
General Motors Corp, Genworth Financial, Gerdau AmeriSteel Corp, Gerdau S.A., Global Industries, Global Partners LP, GMX Resources, GNC Corp, Gold Fields Ltd, Goldcorp, GP Strategies, Gran Tierra Energy, Great Lakes Dredge & Dock Corp, Griffon, GSI Technology, GTSI Corp, Gulfport Energy Corp, Hansen Natural, Hardinge, Haynes Int’l, HealthTronics, Heartland Payment Systems, Hellenic Telecommunications, Hercules Technology Growth Capital, Holly, Home Diagnostics, Home Inns & Hotels Management, Horsehead Holding Corp, HRPT Properties Trust, HSN, Hughes Communications and Hypercom Corp.
I.D. Systems, i2 Technologies, Idacorp, IMAX Corp, Imperial Sugar, Information Services Group, InnerWorkings, Innodata Isogen, Inspire Pharmaceuticals, Insulet Corp, Intelli-Check, Int’l Rectifier, Internet Capital Group, Intrepid Potash, Isis Pharmaceuticals, Javelin Pharmaceuticals, JMP Group, Key Energy Services, Kimball Int’l, Kite Realty Group Trust, KKR Financial Holdings LLC, Knology, Kodiak Oil & Gas Corp, Koppers Holdings and K-Swiss.
Lakes Entertainment, Lamar Advertising Co, Landry’s Restaurants, Lanxess AG, Leap Wireless Int’l, Lee Enterprises, Lexington Realty Trust, Linn Energy LLC, Live Nation, Luminex Corp, Luxottica Group, Macquarie Infrastructure Co, Magyar Telekom, Main Street Capital Corp, Manulife Financial Corp, MarineMax, Markel Corp, Mastech Holdings, Maximus, McGrath Rentcorp, Medical Properties Trust, Medicis, Mednax, Meridian Resource, MetroPCS Communications, Michael Baker Corp, Microchip Technology, Micrus Endovascular, Mid-America Apartment Communities, Midas, Millipore Corp, MoneyGram Int’l, Move, MSC Software, MTR Gaming Group and Multi Fineline Electronix.
Nanosphere, Natco, Nationwide Health Properties, Natural Resource Partners LP, Navigant Consulting, Net 1 UEPS Technologies, New York Mortgage Trust, Newport Corp, NGP Capital Resources Co, NICE Systems, North American Palladium, NorthStar Realty Finance Corp, Novatel Wireless, Noven Pharmaceuticals, Numerex Corp, Nvidia Corp, Obagi Medical Products, Ocwen Financial, Oil States Int’l, OM Group, Omega HealthCare Investors, OncoGenex Technologies, OpenTV Corp, Orion Marine Group, Orthovita and Osiris Therapeutics.
PDL BioPharma, Pengrowth Energy Trust, Pepco Holdings, Perficient, Perini Corp, Perma-Fix Environmental Services, Perrigo, Pinnacle Airlines Corp, Pioneer Drilling Co, Plains Exploration, PowerSecure Int’l, Primedia, Princeton Review, PROS Holdings, Public Storage, Ralcorp Holdings, Ramtron Int’l, Randgold Resources Ltd, ResCare, ResMed, Rofin-Sinar Technologies, Rowan Companies, Royal Gold, RRsat Global Communications Network Ltd, RSC Holdings and Rudolph Technologies.
Safeguard Scientifics, Saga Communications, SandRidge Energy, Sapient, Sara Lee, Schweitzer-Mauduit Int’l, Scientific Games Corp, Service Corp Int’l, ShoreTel, Sirius Satellite Radio, Smart Balance, SoftBrands, Solera Holdings, Sotheby’s, Specialty Underwriters’ Alliance, SRA Int’l, SRS Labs, Standard Pacific Corp, Standex Int’l Corp, Star-Tek, Steris, Suburban Propane Partners, Sucampo Pharmaceuticals, Sun Communities, Sun Life Financial, Sunstone Hotel Investors, Swift Energy, SXC Health Solutions, Symmetry Medical, Syniverse Technologies and Synta Pharmaceuticals Corp.
TAL Int’l Group, Taleo Corp, TAM S.A., Tandy Leather Factory, Targa Resources Partners LP, Tekelec, Telecom Corp of New Zealand Ltd, Telecom Italia, Telus, Tennant Co, Teradata, Teton Energy Corp, The Allstate Corp, The DIRECTV Group, The Hanover Insurance Group, The Knot, The Nasdaq OMX Group, Theragenics Corp, Thomson Reuters Corp, Thoratec Corp, Tower Group, Transact Technologies, Transglobe Energy Corp, TransMontaigne Partners LP and TreeHouse Foods.
U.S. Physical Therapy, Unilever PLC, Universal Display, Universal Electronics, U-Store-It Trust, Utek Corp, UTStarcom, Venoco, VeriSign, Verso Paper, Vonage Holdings Corp, W.P. Carey & Co LLC, Warner Music Group, Watson Wyatt Worldwide, Weight Watchers Int’l, Wendy’s/Arby’s Group, Winthrop Realty Trust, WNS Holdings, World Fuel Services Corp, World Wrestling Entertainment, and Xoma Ltd.
The following economic reports are due: Initial Jobless Claims for the week of May 2 (the consensus expects a decrease of 1,000), Q1 productivity (the consensus expects 0.3%), Q1 labor costs, DJ-BTMU Business Barometer for April 25, March Consumer Credit (the consensus expects a drop of $5 billion), and April Chain Store Sales.
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