Stocks were mostly higher on Wednesday with the major indexes hovering near record levels in range bound trading. Investors focused on a better-than-expected ADP employment report, inline Factory Orders, and improved EPS guidance for the upcoming Q2 earnings season. Healthcare and Telecom led S&P 500 gainers while Utilities – still the best performing sector for 2014 – topped declines. Crude Oil is lower while Gold and the dollar trade higher.
In economic news, ADP private payrolls surprised to the upside, jumping 281K in June and well ahead of consensus for a 206K gain. The reading was the biggest increase since November 2012. Factory orders, which represent the dollar level of new orders for both durable and nondurable goods, fell 0.5% in May vs consensus for a 0.4% slip. The news had little effect on equities. Investors now look towards a long list of employment data due tomorrow at 8:30am ET.
Looking ahead to earnings season, the estimated EPS growth rate for S&P 500 companies in Q2 2014 is about 5.1%. Of the major S&P 500 sectors, nine of the ten are projected to post higher EPS compared to a year ago, led by the Telecom, Consumer Discretionary, Materials, and Energy. The only sector anticipated to report lower earnings relative to a year ago are Financials.
Market Indices/Statistics:
- Dow closed up 20.17 pts. / +0.12% to 16,976.24; 16 of the 30 Dow stocks closed higher.
- S&P closed up 1.30 pts. / +0.07% to 1,974.62; 6 of the 10 S&P 500 sectors closed higher.
- Nasdaq closed down 0.92 pts. / -0.02% to 4,457.73
- Healthcare was the strongest sector (+0.71%) Utilities were the weakest sector (-1.96%)
- The VIX is down 0.26 at 10.89
- Gold is up 1.3 to 1327.9
- Oil is down 1.15 to 104.19
- Nat Gas is down 0.086 to 4.350
- Yen vs. Dollar is up 0.27 to 101.79
- Euro vs. Dollar is down 0.0023 to 1.3655
- The US Dollar Index (DXY) is up 0.14 to 79.96
Top Headlines:
A fair amount of headlines around speculation that Rackspace Hosting Inc (NYSE: RAX) may take itself private. Shares of the cloud service provider rose 6.31% to $35.88 after technology blog “TechCrunch”- citing a source within the company - said Rackspace has received at least three acquisition bids, including those from Hewlett-Packard and IBM. Note Rackspace said in a regulatory filing in May that it had been approached by multiple parties and had hired Morgan Stanley as advisors.
Constellation Brands Inc (NYSE: STZ) gained 2.34% to $90.45 after the United States’ largest supplier of alcoholic beverages posted Q1 revenue and profit above Wall Street expectations as its advertising campaigns boosted sales, more specifically in its Corona and Modelo beer brands.
The financial sector, a notable laggard in Q2 2014, received somewhat of a boost today after Deutsche Bank upgraded its rating on Bank of America Corp (NYSE: BAC) to "buy" from "hold" and raised its price target to $18 from $16.50, citing higher interest rates and an revenue increase in the bank's capital markets business. Shares of BAC finished 1.60% higher at $15.85 in active NY trading.
Coming Thursday
U.S. Economic Reports:
Challenger Job Cuts (Jun) at 7:30am ET – prior 52.961K
Initial Jobless Claims (28-Jun) at 8:30am ET – consensus 312K, prior 312K
Continuing Claims (21-Jun) at 8:30am ET – consensus 2575K, prior 2561K
Average Hourly Earnings (Jun) at 8:30am ET – consensus +0.2%, prior +0.2%
Average Weekly Hours (Jun) at 8:30am ET – consensus 34.5, prior 34.5
Nonfarm Payrolls (Jun) at 8:30am ET – consensus +215K, prior +217K
Unemployment Rate (Jun) at 8:30am ET – consensus 6.3%, prior 6.3%
International Trade (May) at 8:30am ET – consensus ($45.0B), prior ($47.2B)
Bloomberg Consumer Comfort (29-Jun) at 9:45am ET – prior 37.1
PMI Services (Jun) at 9:45am ET – prior 58.1
ISM Non-Manufacturing Index (Jun) at 10:00am ET – consensus 56.3, prior 56.3
Earnings Thursday:
BMO: Hertz Global (HTZ); International Speedway (ISCA); Seanergy Maritime Holdings (SHIP)
Thursday, July 3, 2014 – The Opening Bell®
Four Block Foundation Founder and President Michael Abrams will ring The Opening Bell at the NYSE.
About Four Block
Four Block Foundation is a non-profit organization committed to providing career development and transition support services to returning veterans and their families. Four Block teaches a semester long, university accredited course that prepares returning veterans for successful careers in corporate America. Four Block is also command sponsored by the Marine Corps Wounded Warrior Battalion at Walter Reed National Medical Center in Bethesda, Maryland where they work closely with severely wounded service members and their caregivers with transitioning back home.
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