Healthcare sector leads the gainers following M&A news
The U.S. stock market closed higher on Tuesday, 22 April 2014 with the S&P 500 extending its winning streak to six days, the longest streak of gains since September 2013. Some selling during the final hour of action pressured the indices from their highs, but they still ended with the bulk of their gains. Investors welcomed better-than-expected results from Comcast and Harley-Davidson, while a flurry of deal news in the health-care sector added to positive sentiment.
The Dow Jones Industrial Average closed off session highs, but still gained 65.12 points, or 0.4%, to 16,514.37. The Nasdaq Composite added 39.91 points, or 1%, to 4,161.46, recording the sixth consecutive session of gains. The S&P 500 ended the day 7.66 points, or 0.4%, higher at 1,879.55, rising for six straight sessions.
Eight out of ten sectors ended in the green. The health-care sector lead gains thanks to deal activity between several pharmaceutical companies, including Allergan and Valeant. Energy and consumer staples sectors ended in the red.
Among Dow components, McDonald's reported bottom-line results as comparable sales in the U.S. declined 1.7% during the first quarter. Among other earnings of note, Dow components Travelers and United Technologies reported better than expected earnings, while their respective sectors ended in mixed fashion.
U.S. economic data released Tuesday included the monthly house price index, existing home sales and the Richmond Fed business survey. The home sales data was a bit better than expected, which lifted the U.S. dollar index slightly, which was in turn slightly bearish for commodities.
In overnight news, Asian and European stock markets were quieter and traded mixed to mostly firmer amid no major, fresh fundamental news to move prices.
Reports Tuesday said China's central bank has announced it is reducing its reserve requirement ratio for its rural commercial banks. This move is an easing of monetary policy to try to stimulate this sector of the Chinese economy. Major banks in urban areas of China were not included in the move. Traders and investors are awaiting key Chinese economic data due out Wednesday: the HSBC April manufacturing PMI for China. Recent China economic data has been mostly downbeat by not meeting market expectations.
Economic data detailed that existing home sales fell 0.2% in March to 4.59 million from an unrevised 4.60 million in February. The consensus expected existing home sales to remain at 4.60 million. Initially, the decline in sales was attributed to extreme weather conditions at the beginning of 2014. However, weather conditions returned more or less to normal in March and sales failed to rebound. The February Housing Price Index from the FHFA increased 0.6%, which followed a revised uptick of 0.4% observed during the prior month.
M&A activity also contributed to the healthcare sector's outperformance as Allergan surged 15.3% after Valeant proposed a merger for $48.30 in cash and 0.83 shares of Valeant for each share of Allergan.
It was a mixed finish for bullion metals on Tuesday, 22 April 2014. Gold prices ended the U.S. day session moderately lower and hit a nine-week low Tuesday. A rally in U.S. equities lured investors away from the precious metal as they assessed a batch of mixed U.S. economic data and continued to watch developments in Ukraine.
Gold for June delivery fell $7.40, or 0.6%, to settle at $1,281.10 an ounce on the Comex division of the New York Mercantile Exchange. Prices have already lost more than 1%, or about $15 an ounce, over the past two trading sessions. May silver tacked on a cent to end at $19.36 an ounce.
Crude oil futures dropped on Tuesday, 22 April 2014 with the May contract settling at a two-week low, pressured by expectations for a rise in weekly U.S. crude inventories as the contract expired at the session's close.
Crude oil for May delivery fell $2.24, or 2.2%, to settle at $102.13 a barrel on the New York Mercantile Exchange on the contract's expiration day.
Traders expect that tomorrow's weekly inventory report by EIA will show a climb of 3.1 million barrels in crude stockpiles for the week ended 18 April. They expect gasoline inventories to fall by 1.7 million barrels and forecast a decline of 900,000 barrels for distillates, which include heating oil.
Indian ADRs ended mostly lower on Tuesday. In the banking space, ICICI Bank declined 1.29% at $43.78 and HDFC Bank shed 2.23% at $39.85. In the IT space, Infosys was down 0.1% at $52.45 and Wipro slipped 4.94% at $12.50. In the other sectors, Tata Motors was up 0.11% at $38.02 and Dr Reddy's Laboratories gained 0.85% at $42.75.
Participation was on the light side as just over 665 million shares changed hands at the NYSE floor.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and New Home Sales for March (consensus 455K) will be reported at 10:00 ET.
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